There should be no lingering damage to the Napa Valley wine industry brand or tourism as a result of the October wildfires, economist Robert Eyler, Ph.D., told a Napa audience this week.
On the other hand, Napa County is already facing a relatively constricted labor market – especially in construction – “and it’s going to get a little bit worse” as a result of the fires, said Eyler, president of Economic Forensics and Analytics, Inc.
The economist made his comments Tuesday night at an event hosted by Morgan Stanley wealth management. More than 50 people attended the gathering, held at the CIA at Copia, to hear Eyler’s thoughts on the local, state and national economies.
In Napa County, a flow of money from insurance companies and state and federal funds will ensure that there’s no barrier to rebuilding, he said.
While the fires impacted certain wineries more severely than others, fire damage to the overall wine industry is not enough to upset revenue forecasts and overall production levels, he said.
“This is just a very tragic hiccup” in the five-to-10-year future of where the wine industry was already headed “and it will basically be washed away by next year’s harvest,” said Eyler, also a professor of Economics at Sonoma State University and director of the Center for Regional Economic Analysis at Sonoma State.
Marketing campaigns by groups such as Visit Napa Valley and Visit California will help with the recovery after the fires, he said.
Visitors need to be informed that for the most part, Napa was undamaged by the fires, and the restaurants and wineries are still here.
Those campaigns “will catch on,” he said.
At the same time, consumer perception of possible smoke-tainted wine from 2017 is an unknown factor.
“We don’t know how consumers are going to react after they taste it,” he said. If they say it tastes smoky and that opinion spreads, it could affect sales, he said.
As a result of the loss of or severe damage to an estimated 637 homes in Napa County, the demand for construction and other related workers will be great, Eyler noted.
“One of the biggest things we’re concerned about is how do we take an already close-to-full employment industry and ask it to do more. You end up importing labor to satisfy demand.”
Napa’s unemployment rate – 3.2 percent in September –remains one of the lowest in the state.
Eyler said he expects that some wine industry workers may be drawn to construction jobs, which then impacts the wine industry. “We should expect a lot of labor market substitution and shifting,” he said.
To accommodate the need for such workers, “We should prepare ourselves to ask our community colleges and high schools to at least consider to start preparing students for careers in construction given the demand that’s going to be here locally.”
Eyler also said that it’s also important that Napa and Sonoma counties work together to rebuild both areas. “This is a regional issue not a local only issue.”
“If we can coordinate resources, labor, contracts, developers, and do it in a regional way,” reconstruction will be speedier, he said.
Statewide, Eyler said he expects the California growth rate to be greater than the U.S. economy over the next three years.
“Napa remains the regional star” after the Great Recession, he said.
The county’s investment in tourism “paid off big,” he said. Napa County has had 3.5 percent job growth since 2016 and 3,100 new jobs have been created since last year, he noted.
“Napa looks very good.”
By March, October’s tourism downturn will be a fading memory, he said.