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Oregon Coast hit by flurry of difficult economic news

07:01 AM PDT on Tuesday, July 15, 2008

By WINSTON ROSS, The (Eugene) Register-Guard

FLORENCE, Ore. -- As if it were a jungle gym, 7-year-old Aaron Brown hopped and swung and climbed about the giant dune buggy that was soon to be his chariot for a whirl into the nearby Oregon Dunes.

Last time he took such a trip, it only lasted a half hour. This trip, he beamed, is "for an hour."

The extended dune ride would cost his grandparents a few extra bucks, but that's an adjustment they're willing to make to please the lad, who was visiting the Oregon Coast for two weeks from Sacramento.

"Every year we do an adventure," explained Patricia Brown, Aaron's grandmother, who lives south of Bandon with her husband, Robert. This year, grandpa adds, is decidedly "closer to home."

Wary of skyrocketing gas prices, the Browns left at the crack of dawn last Wednesday morning to make sure they had enough time to go shopping in Coos Bay. They chose Wednesday because it coincides with the town's farmer's market, then proceeded up the coast only as far as Florence.

They figured they'd be home by dusk; a long day, but by combining the trips, they save on fuel.

Decisions like that can be found up and down the Oregon Coast these days, with gas above $4 a gallon and a nationwide recession looming.

A convergence of factors has retailers, hoteliers and other businesses that rely on summer tourist traffic plenty worried.

The home-sales market on the coast is faltering; the closure of a critical industrial rail line between Coquille and Eugene has major coast employers bleeding with increased transportation costs; salmon fishermen are largely out of work after an unprecedented West Coast closure of most of the fishery, and on Friday they were denied emergency aid by the federal government; and a brutal winter kept tourists away from the beach for most of the year.

It's too early, however, to determine how severely that crush of lousy news is going to hurt the coast's economy. There are some indicators that locales close to Willamette Valley population centers might get a tourism bounce, thanks to close-to-homers like the Browns who might otherwise have taken their grandson on a more far-flung adventure.

Marcia Nichols' church camp will be held in Lakeside on the coast this year, instead of inland up the McKenzie River. The manager of Florence's South Jetty RV store says she's heard of similar reining-in among her customers, too. The farthest away any of her visitors this year have come from is Spokane, Wash., and central California. In past years they've been from all over the United States.

Or, they're waiting until the last minute to decide if -- and where -- they can afford to vacation, said Marv Vandestreek, owner of the Edwin K. Bed and Breakfast in Florence. Much of the Edwin's reservations have been made only a few days before arrival this year, said Vandestreek, who expects he'll be lucky this year if the business keeps pace with last year's revenues.

"They're figuring out how much gas and lodging is going to cost, and where to go," Vandestreek said.

"Those that do show up are more miserly," said Ilene Hague, owner of the Sandland Adventures Fun Center, where the Browns took their dune ride.

"People are picking and choosing more," Hague said. "Instead of letting their kids go on everything, they say 'You have to choose one."'

Look at the numbers, and you get a similarly mixed bag.

Coos County has seen a net gain of 290 jobs since April, according to state labor figures -- no surprise given the typical bump in seasonal gigs with the onset of the tourist glut -- but a decline overall of 40 jobs from the year before, which is small enough to be statistically insignificant.

Food manufacturing jobs in Lincoln County, which include seafood processing, are down 12 percent from this time last year, and the leisure and hospitality industry in that county is employing 30 fewer people this year so far.

The unemployment rate in Coos County is at 6.4 percent, up slightly over last year but a number to be taken in perspective, given that the stat has only been that low in three years since 1990, said Guy Tauer, a state economist who analyzes the southern Oregon Coast.

In some places, the hospitality industry appears to be doing fine.

Room taxes collected in Newport over the past year reached $177,000, an increase of $7,000 over the year before that. Hotel occupancy during the month of May was at 55 percent, up a bit from the same period last year and a good distance from April's 47 percent.

There's plenty of bad news though: The greater Florence area saw 306 sales of single-family residences in 2007, down from 449 just two years before that. This year, if things continue at their current rate, the number will drop to 200 sales, said Tawfik Adahb, a real estate appraiser for the region. That's a lot fewer sales commissions for the area's real estate agents.

Horizon airlines recently announced the company is halting flights from Coos Bay to Portland because of a hike in fuel prices. Despite that, the route is actually profitable, said Ron Optiz, executive director of the South Coast Development Council.

"They want to change planes, and they're not convinced the bigger plane is going to work in the smaller markets," Opitz said. "Losing Horizon with four flights a day to Portland is a critical issue."

The rail line is costing the four major shippers in Coos County more than a half-million dollars each month in added transportation costs, which makes the mills less competitive in an already troubled national economy, said Bob Ragon, executive director of the Douglas Timber Operators.

Commercial salmon fishermen can expect a combined income of $600,000 or less this year, down from the $10.4 million they brought in last year, said Tauer. And sport fishermen are hiking their trip prices to offset fuel costs, which has resulted in a 30 percent plunge in revenues this year compared with last, said Lauren Goddard, who operates a six-man charter out of Depoe Bay.

Yet for other sectors of the coastal economy -- retirees living on pension checks, for example -- all this turbulence has little effect.

The real estate slowdown hurts builders and contractors, to be sure. The reduction in air service may mean fewer travelers to the south coast to golf at Bandon Dunes.

Yet elements of the tourism and retirement economies seem to be cruising along.

"The people who have money have money," said Hans Radtke, a Yachats economist. "It doesn't seem to affect them yet, so much. There is some trading down on big gas guzzlers, but these big motorhome people seem to be immune to price changes in the short run. There's a lot of uneasiness, but nothing anyone can put their finger on."

Tourist traffic seems to be brisk, said Lincoln County Commissioner Terry Thompson. "We have people here; there's no question about it," Thompson said. "I think we'll see the real effect of the (national) slowdown in the fall."

Typically, the Fourth of July is a good indicator of the health of the tourist season's start, said Gayle Sisson, president of the Merchants of Old Town in Florence and owner of the Grape Leaf Wines and Bistro. The U.S. Track and Field Olympic Trials in Eugene coinciding with that holiday throws off that method of evaluating the economy, however.

Some Bay Street retailers saw a bump during the week, Sisson said. But her shop, thanks in part to the restrictions on flying with liquids and new fees for checked bags, didn't do so well.

While motels in the region haven't been full, vacation homes are rented out, Sisson said -- an indicator that tourists are cooking their own food to save a few bucks.

"People are still coming, but they're self-contained," Sisson said. "They're doing things that cost less money."

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