Fallout from the national housing slowdown has reared its head in Prineville, where a longtime wood products manufacturer eliminated 55 mostly lower-skilled positions last week.

Clackamas-based Contact Industries — which makes door, window and furniture components primarily used in new home construction — saw a steep drop in orders from the nation’s housing industry last year, said Bob Horton, vice president of manufacturing. “We want to be proactive before we get ourselves in a deep hole,” Horton said. “It seems like housing is going to stay weak for a period of time.”

The cuts, which amounted to 11 percent of Contact’s work force, included positions across the board, but highly skilled workers were retained, Horton said. The company also moved some leadership positions into production positions and plans to add new products that are not tied directly to residential housing, he said.

Contact Industries opened as Clear Pine Mouldings in Prineville in 1954.

Economic development officials were not surprised by Contact Industries’ cuts since overall housing starts dropped about 25 percent nationally in 2007 to 1.35 million units, according to the U.S. Commerce Department.

“It’s a logical reaction to what’s happening in the marketplace,” said Roger Lee, executive director of Economic Development for Central Oregon. “It’s difficult for companies to maintain peak employment levels when there’s not home manufacturing taking place. I imagine it won’t be the last partial layoff you’ll see from building products companies in the marketplace.”

The job losses at Contact Industries come on the heels of Crook County posting a 7.3 percent unemployment rate in December, up from 5.9 percent in December 2006, according to the Oregon Employment Department.

The county saw a 6.2 percent loss in the number of manufacturing jobs in 2007, the second consecutive year of negative manufacturing growth. Its overall job growth in 2007 was 0.6 percent, compared with 3.6 percent in 2006, according to the department.

Despite the job losses at Contact Industries, Central Oregon companies are expected to grow and add jobs this year, Lee said. A record number of 34 expansion projects are already slated for this year across the region, Lee said.

“Recruitment is down, but job numbers are up,” he said. “It looks like another busy year. The question is, Can we make up enough jobs to make up for the losses in the building industry?”

The losses will hurt in a small community like Prineville, population 10,190, said Bruce Daucsavage, president of Ochoco Lumber Co.

“It’s hard for Prineville when we see a hit like this,” Daucsavage said. “It will filter down in some fashion. Less people will go out for dinner or go shopping.”

Contact’s 55 displaced workers are receiving job training and job-search assistance at the Prineville branch of the Oregon Employment Department, said Teresa Rodriguez, business and employment specialist for the state agency.

“We’re trying to be supportive and help those people who have been displaced,” Rodriguez said.

Some of the former Contact Industries employees will move to one of the five other wood products manufacturing companies in Prineville, Rodriguez said.

One of those companies, Woodgrain Millwork, saw its production drop by 30 percent in 2007, said Steve Forrester, the company’s general manager.

But the decrease will not likely result in job losses for the company, which has about 340 workers, because production levels are expected to flatten this year after the Fruitland, Idaho-based company closed its White City mill near Medford in September and moved much of the business to Prineville, he said.

To get help

Displaced workers can find job search assistance and training skills provided free of charge at the state’s Employment Department in Prineville. For more information, call 447-8076 or visit www .workinginoregon.org.