20th Anniversary: Bear-market blues mild compared to mid-?80s

Business Report Correspondent

As this installment of Boulder County’s business history goes to press, the Dow Jones Industrial Average is doing its best to give investors heart palpitations, and the tech-heavy Nasdaq has nosed under 2,000 for the first time in years. Layoffs at heretofore-robust technology giants are becoming almost daily events, and President Bush is barnstorming the nation with his tax-cut agenda. The collective hand wringing is almost audible.

Wait a minute — have we entered the way-back machine? Is this really 2001? Or are we reliving the 1980s?

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Well, if we are, the current version of the tech industry’s bear-market blues is mild — at least here in Boulder County — compared to 16 years ago. In 1985, the bottom fell out of this county’s economy in a big way. Indeed, that year’s top business story can be summed up in one word: layoffs.

While the county’s unemployment rate today is an almost imperceptible 2.2 percent, in 1985, it hit 7.5 percent, a 40-year high. Lately, the largest layoff in the county affected some 35 people. In 1985, more than 2,300 workers lost their jobs here.

The dramatic downturn in the county’s business fortunes actually began at the end of 1984, when Louisville-based Storage Technology Corp. stripped itself of more than 1,000 workers. In January 1985, the beleaguered tech giant added another 1,000 pink slips.

Longmont’s now defunct disk-drive maker, MiniScribe, which was ballyhooed by analysts then as having a greater chance of survival than StorageTek, also continued shrinking its workforce. In early fall 1984, it had laid off about 530 workers. In January 1985, it laid off another 450 and shipped all its manufacturing overseas to Hong Kong and Singapore. Instead of paying its Longmont workers an average of $4.50 to $6 per hour, MiniScribe had opted for $1 an hour labor in Asia. In April, the company laid off another 100 workers.

The domino effect was solidly in play as smaller companies followed in the workforce-reduction footsteps of the major technology employers, and commercial and residential real estate began to suffer. Many will never forget that office vacancy rates in the Denver-metro area hovered at around 30 percent in 1985, and that there was much disappointment on the part of local economists when the drop in mortgage rates — to 12 percent — didn’t spark a run on home buying.

“Lots of investors just let their properties go,” recalls broker Mark Van Ark of Coldwell Banker Commercial-Colorado Landmark Realtors. “There were a lot of out-of-state dollars in Boulder at the time. The economy in California was in the toilet at the time, and people moved their dollars here. Then this economy went down.”

As a result, necessity became the mother of invention. One of the popular ways for brokers to market empty properties was to become part of an exchange group comprised of brokers nationwide. Many of these exchanges would involve three or four listings or more. “I was in involved with one where 13 properties changed hands,” Van Ark says.

But inventiveness was not the sole province of commercial real estate brokers in those days. One man, Ray Tallman, started an effort that changed the lives of literally thousands of Boulder County’s laid-off workers. Tallman, now a career counselor and corporate outplacement consultant, had been manager of human resources and corporate administration at StorageTek until he was laid off at the end of 1984. At the time, he also was on the board of the Boulder County Mental Health Center.

Tallman recalls that his expanded involvement in the scenario that put himself and so many other county workers off the payroll came as a result of a phone call from Phoebe Norton, Mental Health Center director. “She had the foresight to think about the community issues involved in all these people being laid off,” he recalls. “It was an extremely difficult time. We were very fearful that a lot of people would sink into depression. Typically what happens then is that divorce rates go up, suicides increase and so does physical abuse.”

Tallman and Norton got together with the county’s Private Industry Partnership and created what was called the Employment Transition Program, which initially was an all-volunteer effort. At first, Tallman set up town hall-type meetings and invited laid-off people to come and discuss their needs.

The information gleaned from the meetings became the grist for the development of a comprehensive job search workshop to which those who had been laid off were recruited. “We got lists from the companies who were laying off of the people who had been laid off, and then we did an outreach program. Volunteers called thousands and thousands of people,” Tallman says.

The workshops were free, and all who went were given the opportunity to have several sessions with mental health counselors, also at no charge. Tallman himself traveled statewide with what he calls resume books. “I gave them to hiring managers and said ?Here are talented people that you can employ.’ “

In addition, Tallman et al. put on a job fair. Companies from other states came and ultimately hired hundreds of the county’s unemployed high-tech workers.

Tallman believes that somewhere on the order of 75 percent of the workers who went through the Employment Transition Program found new jobs. Through his efforts the U.S. Department of Labor got wind of the program and funded it to the tune of $1 million. “People ended up getting skills updates that allowed them to get back into the work force and maintain a level of income they were accustomed to,” Tallman says.

For their work, both Tallman and Norton were honored with the 1985 Pacesetter award from the Daily Camera. It was the first year that newspaper gave such awards.

What Tallman says he remembers most about those times is the way the county came together. “All of the county agencies pitched in and came through. Many of the churches allowed us to use their facilities to put on the workshops. The university (of Colorado) helped us. There was hardly an element of the community that didn’t help.”

But could that spirit of community be rallied again here? Tallman thinks so. “I’m convinced that, should such circumstances arise again, this community is capable and willing to help,” he says. Hopefully, such help will not be needed again anytime soon.