PORT ANGELES — Sinking log exports and topside repairs that were shanghaied to Singapore have led the Port of Port Angeles to trim its spending by $320,660 for 2015.
Although its operations aren’t “bleeding cash,” Finance Director Karen Goschen has told port commissioners that “our revenues are likely to be down for the year, perhaps as much as $1 million or $1.2 million.”
Declining earnings have reduced the port’s net surplus $428,300, she said.
That, though, includes more than $516,000 in depreciation of buildings and equipment, according to Goschen.
The port figures depreciation as the amount it would cost to replace aging assets.
In the meantime, she said, the port projects a positive cash flow of $321,000 for 2015 even in a “worst-case scenario.”
What’s to blame?
■ Log exports have fallen 20 percent due to a strong U.S. dollar, a slowing Chinese economy and a glut of logs in that country. The port, meanwhile, does not staff its log yard for peak activity but increases workers’ hours to meet demands.
■ The port’s air passenger service marketing study, plus ongoing efforts to develop a Composite Recycling Technology Center, continues to spend funds without yet generating income.
■ Revenue at William R. Fairchild International Airport, devoid of air passenger service, remains flat and could go into the red if the port subsidizes renewed service.
According to an air-service consultant, however, income from an air carrier could erase losses within three years.
■ Cheaper Asian labor has led one shipowner to tie up for topside repairs in Singapore, said Michael Nimmo, marine terminal manager, producing a 20 percent falloff in revenue.
A possible bright spot on that horizon, however, is rising oil prices and profits, which may spur ship owners to perform maintenance they deferred when oil futures dipped, Nimmo said.
Budget surpluses actually are rare for the port, said Goschen. Only in 2013-14 was there a net surplus during the past decade, Goschen said.
Meanwhile, the port has shouldered $4.2 million of improvements to its rental properties and more than $7 million to abate and treat storm water on the harbor front.
The $320,660 savings will come from deferring raises and trimming salaries, delaying dredging at Terminal 3 where ships are loaded with logs and eliminating a trade trip to China.
While Commissioner Colleen McAleer said, “I think there is absolute improvement that we can do,” her colleagues appeared less worried.
“I don’t have any real concern with any of these [reductions] that I would fall on my sword over,” said Commissioner John Calhoun.
“It’s not an insignificant reduction, but it’s not crippling, either.”
“We’re out on front on this,” said Commissioner Jim Hallett. “This is precisely what this commission wants to hear.”
Goschen told commissioners she would update them in August but, until then, not recommend other major budget reductions.
Meanwhile, port officials will pursue returning air service to Fairchild Airport, where they also hope to open the composites recycling center this year.
With caution, Hallett said, “we’re growing our way forward rather than cutting our way to next to nothing.”
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Reporter James Casey can be reached at 360-452-2345, ext. 5074, or at jcasey@peninsuladailynews.com.
