Oklahoma ranked fifth in the nation last year in high-tech job growth, largely because of expansion in the commercial aircraft and transportation equipment business, according to an economic profile released Thursday by the Federal Deposit Insurance Corp.
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Tulsa’s aerospace cluster has provided much of the boost “and represents a bright spot for the Oklahoma economy,” the report said.
Larry Findeiss, executive director of the Oklahoma Aerospace Alliance, said Tulsa companies such as Spirit AeroSystems and Nordam continue to seek qualified engineers and other positions that require specific expertise. Spirit AeroSystems may fill up to 1,200 jobs that qualify for state incentives under the Quality Job Program.
“We’ve probably put back on a lot of employment that we lost in the period following 9/11,” Findeiss said.
Most of the state’s aerospace business is in maintenance, overhaul and repair of military and commercial aircraft. Findeiss said demand for employees related to defense and commercial aviation should remain steady for the foreseeable future.
Erin Wright, Oklahoma Aeronautics Commission aviation and government affairs liaison, said the state’s aerospace industry provides more than 140,000 jobs, about $4.7 billion in payroll and roughly $11.7 billion in industrial output.
“One in 10 Oklahomans derives income from the aerospace industry,” Wright said. “It has a huge role.”
Despite the general strength of the Oklahoma economy, some concerns were noted in the FDIC quarterly profile. Drought conditions across the western two-thirds of the state has delivered a blow to Oklahoma’s agriculture industry, which already was suffering.
“Agricultural producers are coping with higher fuel prices and rising borrowing costs, and they could be vulnerable to reductions in farm subsidies going forward,” the report said.
A continuing drought also could spell trouble for some banks, the report said. FDIC economists noted that 175 community banks are based in the drought area. Those banks hold agricultural loans totaling $1.9 billion and total loans of about $12.6 billion.
Craig Buford, president of the Oklahoma Community Bankers Association, said the vast majority of state banks are well-capitalized and should be able to weather the drought and work with farmers who are in economic dire straits.
“Overall, if you look especially at the western two-thirds of Oklahoma where you do have agriculture and less population, that’s where so much of the drought has been and you’re going to have some tough times and lower performance both for the customer and the bank,” Buford said.
The report also raised concern about consumer finances, based on Oklahoma’s poor showing in personal bankruptcy filings, past-due consumer loans and mortgage foreclosures.
New bankruptcy laws that took effect in October skewed filing numbers as individuals flooded bankruptcy courts with filings. However, the state’s per-capita rate over the past four quarters exceeds the national average, the FDIC reported.
Oklahoma’s banks and thrifts hold a larger share of their loan portfolios in consumer loans than the financial institutions of any state. While the state’s improving economy has reduced the past-due rate among consumer loans, it remains the second-highest in the nation.
Mortgage foreclosures that began in the first three months of 2006 were near 10-year highs and have increased dramatically over the past six years, the FDIC economists said. State banks reported mortgage loan past-due rates that were the ninth-highest in the nation.
THUMBS UP
Oklahoma’s booming aerospace industry, particularly in Tulsa, drove the state’s high-tech job growth to fifth in the nation last year. Demand for commercial aircraft and transportation equipment boosted Oklahoma exports by one-third.
Per-capita income among Oklahoma residents rose more quickly than the nation in 2005, again because of new high-tech jobs that pay an average of 55 percent more than other private-sector jobs.
Oklahoma’s banks and thrifts reported strong earnings the first three months of 2006.
THUMBS DOWN
Forecasters expect the drought that devastated the state’s wheat crop to worsen through the summer. Small banks based in the hardest-hit areas that carry a heavy agricultural loan portfolio could suffer.
Consumer loans make up a larger part of loan portfolios at Oklahoma banks than in any state. Unfortunately, the state has the second-highest past-due rate on those loans.
Oklahoma has among the nation’s highest rates of mortgage foreclosures and past-due mortgage payments.
