Hi Deb,

Well, that caterpillar is a native species, so I would not consider it a pest. It is the juvenile stage of a silver-spotted tiger moth, Lophocampa argentata.

Silver-spotted tiger moth caterpillars feed upon the needles of various conifers, including Sitka spruces, Douglas-firs, and lodgepole pines. They feed together in a group, staying in a dense colony on a single branch until it's completely defoliated. This is unsightly and somewhat alarming, but unless there are lots of colonies or the tree is small, the damage to the tree as a whole is minimal.

Here is some lifecycle information from the bugguide.net website...
Adults lay eggs in July and August. Larvae feed from August until
winter, at which time they spin webs for shelter and hibernate (they sometimes come out and feed on warm days, even as early as January). During the late spring they disperse throughout the tree for a short while, then in May and June find secluded places to pupate.

And here is a link for some additional information...
http://pnwmoths.biol.wwu.edu/browse/family-erebidae/subfamily-arctiinae/tribe-arctiini/lophocampa/lophocampa-argentata/

Hope that helps!
Enjoy!