Expect ups, downs in 2006

This edition of the Northern Colorado Business Report is full of economic predictions for the new year, from regional economist John Green to numerous industry leaders who participated in an informal Economic Roundtable that our newspaper conducted earlier this month.

Add in the articles examining specific industries, with forecasts for 2006, and the Business Report’s Economic Forecast 2006 event Jan. 19 at the Island Grove Event Center in Greeley, and you’ll witness many different ideas of what might lie in store for Northern Colorado’s economy.

So why shouldn’t I contribute my own ideas? (Let’s set aside the technicality that I’m not an economist.) But take ’em or leave ’em, here are my own predictions for the region’s economy:

n Further high-tech cutbacks. The job cuts that we’ve experienced, really for the past five to seven years, will continue. Gone are Flextronics, Merix, Celestica, VantagePoint Network and others. Vastly reduced are LSI, Advanced Energy Industries, etc. Likely to cut further are Agilent and Hewlett-Packard. A few bright spots, such as Intel, but overall, continued reduction in the size of this sector in Northern Colorado.

n A mixed bag in biotech. Cuts are under way at QLT-USA, formerly Atrix Laboratories, even as a push for growth in the sector comes from state, local and Colorado State University officials. Can we truly build a biotech cluster in Northern Colorado? Certainly, a concerted effort is taking shape.

n Health care carries the day. Population growth begets demand for health-care services. Witness the booming construction at North Colorado Medical Center in Greeley, McKee Medical Center in Loveland, the new Medical Center of the Rockies in Loveland and expansion elsewhere by hospital systems from Northern Colorado, Cheyenne, Longmont and even metro Denver. Medical providers will continue to require large numbers of new employees.

n Real estate slowdown? Some price ranges have slowed down already, and I would anticipate that continuing in 2006, partly because of rising interest rates. It is fortunate, however, that high-tech job cuts have been somewhat offset by gains in other sectors. That means the effect on real estate has been muted up till now. (Of course, if interest rates remain low, look for a stable market in ’06.)

n Not a stellar year in ag. Rarely would I ever predict strong growth in the volatile agricultural sector, and this year is no exception. On the bright side, Japan’s loosening of its ban against U.S. beef should boost an industry devastated by a single case of Mad Cow Disease.

n At your service. Many economists and business analysts have noted this trend, but it remains true: The service sector is growing rapidly in Northern Colorado, with retailers and other service industries reaping the benefits of continued population growth. Expect more gains in the new year.

n Bank on it. An old familiar song, the proliferation of bank branches will not let up in 2006. Look for new banks to enter the market and existing banks to add more locations. There’s got to be some street corners out there without a financial institution, and banking officials are sure to find them.

All in all, 2006 likely will look a lot like 2005: solid growth overall, but setbacks in specific sectors.

Here’s to a prosperous and profitable new year for you and your business.

Christopher Wood can be reached at (970) 221-5400 or via e-mail at cwood@ncbr.com. His fax number is (970) 221-5432.

on Facebook on LinkedIn