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Napa economy holds fast after wildfires, but labor shortages loom

Napa economy holds fast after wildfires, but labor shortages loom

A rebuilding sign seen at a home site at Silverado Resort

A rebuilding sign seen at a home site near Silverado Resort. Many construction workers will be needed to rebuild more than 600 homes in Napa County that were destroyed by the October wildfires. 

An area economist has encouraging words about Napa County’s economic recovery from the October wildfires.

“Napa is still a very attractive place to live and work. People will come back” and continue to spend money, said Robert Eyler, Ph.D., professor of economics at Sonoma State University. At the same time, a labor shortage remains a constant concern, he said.

Eyler shared these remarks during a phone interview in advance of a presentation on Friday at a Sonoma County economic conference. The presentation, “Regional Reconstruction and Expansion,” was hosted by the North Bay Business Journal and Sonoma State and held in Rohnert Park.

While Sonoma County faces a significant battle to rebuild both physically and economically, in Napa County “everything is OK in the medium- to long-term,” said Eyler. “There is no reason to panic.”

At the same time, county supervisors, cities, neighborhoods, builders, businesses and agencies must work together to rebuild, said the economist.

That also means continuing to communicate the message that Napa Valley is open for business, he noted.

“Napa County relies a lot on weekend travelers from the Bay Area,” said Eyler. “If those folks utilize social media” to promote their visits “and keep coming up here, that will help a lot on getting the word out.”

On Thursday, Visit Napa Valley, Napa County’s official tourism agency, reported positive visitation numbers from Smith Travel Research for December and January.

Hotel occupancy was 6.8 percent higher in December from the previous year and hotel revenue was up 9.2 percent. In January, occupancy was 4 percent higher from the previous year and revenue was up by 8.8 percent.

As for the fires’ effect on 2017 wines, “we need to get through the 2017 vintage and get some tasting notes” to combat any perception that the vintage will have reduced quality because of smoke taint, he said.

If those things work out, said Eyler, “We should see a resurgence” during the coming tourist season and “Napa County should have a great year in 2018.”

The October 2017 wildfires were estimated to cost $9.4 billion in insured damages, said California Insurance Commissioner Dave Jones. Because the fires crossed county lines, that figure includes damage for both Sonoma and Napa counties.

While the fires were a tragedy, the rebuilding process will impact the local economy, said Eyler.

Eyler estimated that every $1 billion of new construction in Napa County will require an estimated 4,860 construction workers supporting another 3,330 jobs. That work will contribute an estimated $215 million for local vendors and merchants and another $213 million to the local economy based on worker and businesses spending. It will also add an estimated $57 million in state and local taxes.

Two additional factors will likely affect the Napa County economy this year. The first is a great demand for labor, said Eyler. Construction workers to rebuild homes are in particular demand. A growing cannabis industry is also siphoning off other workers, he said.

“There was a lot of news last year how Napa Valley wineries and vineyards were struggling to find labor,” he said. “This year is going to be worse because there are more uncertainties on the labor demand side. It’s going to be a confounding year for Napa wineries, vineyards and hospitality industries.”

“And it’s not only in Napa County where there will be competition,” said Eyler. “It’s a regional marketplace. Napa employers have got to be thinking now what they intend to do to find workers come harvest and bottling time.”


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Business Editor

Jennifer Huffman is the business editor and a general assignment reporter for the Napa Valley Register. I cover a wide variety of topics for the newspaper. I've been with the Register since 2005.

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