Paucity of publicly traded companies hampers Pierce County’s ability to build wealth

Some stuff has been happening in the stock market this year. Had you heard?

For all of the warnings and handwringing — this expansion is incredibly old and it’s got to give out sometime, the rest of the world is slowing so why not us too, trade fights and tariffs are going to drag the economy into a recession, if those don’t get us there the politicians will, the tech sector is under attack, investors are increasingly skeptical about emerging companies with dazzling stories (WeWork) — the stock market has been plodding along.

Better than plodding, actually. The Dow Jones Industrial Average was up more than 18 percent for 2019 as of midweek. The Nasdaq Composite was up more than 29 percent. The S&P 500 gained more than 24 percent. Those are the sorts of percentage increases that, back in the musty days of investment advice, investors were told never to expect as a regular occurrence.

Those numbers matter. They mean extra dollars in the saving and retirement accounts for millions of Americans and, for those companies going to market, more financial resources to expand and compete.

The general public, even those who do hold stocks directly, in mutual funds or in retirement accounts, might be excused not having given much notice. Scorched by the experience of the Great Recession (and, if they were around long enough, the dot-com bust beforehand), many investors shut down paying attention to the market, not wishing to intensify their despondency as portfolios melted away, or having more immediate and concrete headaches to focus on, such as staying employed.

Investors may also have soured on the market because of news about hyperspeed trading that had little connection with investing principles, underlying companies or the economy. And they might have had their fill of stories about companies that scored big in the initial public offering market despite having no evident pathway to profitability.

The news about the stock market has been especially easy to ignore in this market —defined as Tacoma and Pierce County — because of the ongoing paucity of publicly traded companies based locally.

One of the ongoing significant differences between this market and its neighbor to north, Seattle and King County, is the disparity in locally based public companies. Seattle/Bellevue/Redmond/etc. has an outsized presence on the global economic stage for the breadth, depth and prominence of companies headquartered there — Amazon, Microsoft, Starbucks, Costco, Paccar and Nordstrom being among the most notable — far out of proportion to its size. Even when companies fall off the list due to HQ relocation (Boeing) or demise (Washington Mutual), new companies in the pipeline emerge to renew the list.

The long list of locally based publics is more than fuel for civic boasting rights. HQ jobs tend to be the better-paying ones, and HQ offices are where decisions are made about corporate philanthropy and community involvement. Seattle would not have the financial resources it has to spend — or squander — were it merely a large collection of branch offices.

Tacoma never had as large a reservoir of public companies, and what it had seemed to be under perpetual threat, as companies moved, were bought out or failed. Weyerhaeuser, Pacific First, the old Puget Sound Bank, a bunch of other banks, Hillhaven, Tacoma Boat, all have been scratched from the list. Making matters worse, there hasn’t been a pipeline of companies going public to replace them.

At present Tacoma has two publicly traded companies, Columbia Bank and True Blue (the staffing company once known as Labor Ready). That gives the city one more than Olympia (Heritage Bank) and Hoquiam (Timberland). Federal Way could make a case for being as put-upon as Tacoma in the publicly-traded-company-disappointments department, having lost over the years such companies as Weyerhaeuser (again), Paragon Trade Brands and Pacific Nuclear.

For those two lonely local representatives, year to date Columbia Banking System is up about 6 percent (if that sounds disappointing it shouldn’t be; banking is not the place you want to see gaudy growth numbers). TrueBlue was up 2.6 percent year-to-date as of mid-week.

Thus the community has missed out on direct participation in the stock market’s recent gains, and next year doesn’t look so promising. While Seattle and King County have had some recent IPOs (Adaptive Biotechnologies, Smartsheet, Avalara) and still more companies on the list of those conjectured to be going public soon, Tacoma and Pierce County haven’t had them, and, if there are candidates to go public, they’re well under the radar.

That’s an economic development challenge that’s tough to deliberately engineer a solution to. The Seattle area’s significance in spinning out new companies is a legacy of decades of history, including the presence of Boeing and Microsoft and the billions that flowed into medical research institutions here.

Tacoma needs a broader base of publicly traded companies — not globally sized players necessarily, but a larger population of small and moderate sized companies would do the community’s economic base well. Maybe they can be recruited from elsewhere (like, from the next county over, as companies find it too maddening and expensive to keep doing business there) or nurtured and grown here.

Having those companies will give this region a way of directing a piece of that wealth sloshing around the stock market this way.