March 12, 2010

Maine retail jobs likely to take big hit

ANN S

— By . KIM

Staff Writer

Significant job losses are expected in Maine's retail sector during 2009, as consumers continue to pull back on their spending, economists said Monday.

''This is, in many ways, a consumer-driven recession,'' said Catherine Reilly, Maine's state economist.

Maine's economy is expected to undergo a net loss of about 4,300 jobs next year, or about 0.7 percent of the 616,100 wage and salary jobs estimated to exist in the state this year, according to the Consensus Economic Forecasting Commission, a state panel that analyzes Maine's economy.

Declining sectors will shed more than 4,300 jobs, but some of the losses will be offset by modest gains in two sectors: health and education services, and professional and business services.

Most sectors are expected to lose jobs, but the retail, transportation and utilities sector is expected to lose the most -- 2,500 -- as shop closings and store layoffs shrink that category from 125,200 positions to 122,700.

The retail sector faces three hurdles: a drastic loss in consumer confidence, a dramatic pullback in consumer credit and a weakening job market, according to Charles Colgan, chairman of the economic forecasting group.

''The consumer confidence will probably be the first (to recover) -- sometime in the spring, probably, but that's not going to solve the problem. It's going to be another year before the credit market straightens out. Then you have to get the job market going again,'' said Colgan, a public policy and management professor at the University of Southern Maine's Muskie School of Public Service.

Examples of impending job losses in retail range from the Office Depot store in South Portland to small shops in downtown Portland.

Overall, struggling retailers in Maine might be able to stay open longer than their peers elsewhere, even though the sector is probably overbuilt in the state, Colgan said. Much of the retail expansion in the state has taken place recently, and the businesses will try to hang on to recoup the fixed costs of the buildings, he said.

Reilly said that if chains end up closing stores in Maine, it probably won't be as drastic as it will be in locations around Las Vegas or Phoenix, for instance. Retailers in those areas are now plagued by high levels of foreclosure because of rapidly expanding populations, she said.

''They're making those building decisions based on, 'We have X number of homes, X income profiles of homeowners.' Now the picture is completely changed,'' she said. ''Those stores will be more vulnerable than those in Maine, where they weren't counting on a big boom in population.''

Construction and manufacturing are two other areas that are expected to see significant job losses next year, according to the forecast. Construction is expected to lose 1,800 jobs, leaving 27,800 jobs next year. Manufacturing jobs are expected to drop by 1,200, to 57,200.

No industry is going to be completely insulated from the economic downturn, although those that do not rely heavily on discretionary spending -- defense-related industries, education and financial services -- are more likely to fare better, according to David Findlay, an economist at Colby College.

''I think any of the industries in Maine that deal with discretionary spending are more likely to take a greater hit as a result of this,'' he said.

Denise Novotny witnessed the effect of those cuts.

The owner of Simply Chic, a boutique on Portland's Exchange Street, noticed a downturn before the holidays last year.

She cut back on her spring orders and continued to see diminishing sales, but nothing she considered overly worrisome. Then, as the bad economic news started to pile up, her sales took a nosedive.

Novotny said business isn't too bad now, but she's going to close her shop because she's worried about the future. The store employed three part-timers.

''I said, 'Maybe now's the time to pull out and get out of the business,' knowing what's lurking around the corner,'' she said.

Philip Trostel, a University of Maine economics and public policy professor, said fields related to construction -- such as those dealing with tools, equipment or raw materials -- will be affected.

Trostel said the effects of the federal government's stimulus package will likely come too late to help the situation.

Charles Lawton agreed that it could take awhile for stimulus package projects to get under way.

But Lawton, an economist for Planning Decisions and a freelance columnist to the Portland Press Herald/Maine Sunday Telegram, said firms that know work is coming might try harder to hold on to workers.

The health and education services and professional and business services sectors are the only ones forecast for growth in 2009, albeit very modest growth -- a couple thousand jobs collectively.

An aging population and federal spending through Medicare and Medicaid are expected to help the health care industry. The business and professional services category includes temporary workers in a number of sectors, a fact that might reflect the lack of regular, full-time employment in other sectors.

Staff writer Ann S. Kim can be contacted at 791-6383 or at:

akim@pressherald.com

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