Executives Optimistic About Business Prospects, UCI Study Says : 50,000 New Jobs Expected in County During ’87
Nearly 50,000 new jobs are expected to be created in Orange County during 1987, and local executives overwhelmingly are optimistic about business conditions this year, according to a new UC Irvine economic study released Wednesday.
Based on historical employment figures and current industry trends, the UCI researchers project that total employment in Orange County will increase more than 5% to about 1.122 million during 1987.
The UCI projection compares with a less-optimistic 2.1% total employment growth estimate released last December by Chapman College’s School of Business and Management in its annual Orange County economic forecast.
The model used in the UCI study to determine growth relies only on historical data and offers no reasons based on current conditions for the expected increase, according to Jone Pearce, associate professor of administration and director of the Orange County Business and Economics Studies program.
Still, in interviews with area executives, which augmented the econometric study, 79% of the chief executive officers queried said they expected improved financial performance during 1987 compared to 1986.
Of the 101 executives who responded, only 6% expected their fortunes to decline this year, while 15% expected no change.
Top local executives also expect increased employment, heightened capital spending and greater revenues during 1987, the survey said.
The bullish Orange County outlook contrasts with a slightly more cautious view taken by companies in other parts of the United States, Pearce said.
“Based on the results of the studies, it appears that the executives of Orange County’s largest businesses are enthusiastic and optimistic about their business prospects in 1987, suggesting a very prosperous year for the county,” she said.
But “executives tend to be overoptimistic in times of growth,” Pearce cautioned. “They tend to follow economic trends rather than lead economic trends.”
Of the executives surveyed, 41% said they expected to hire more employees during 1987. About half planned to employ the same number, while only 9% planned to reduce the number of people they employ.
Moreover, most of the executives responding to the survey represented only the largest companies, which generally employ fewer than half the county’s workers. Consequently, Pearce said she could “not make any claim for the reliability” of the projections.
‘Nice Place to Live’
“Next year, we’ll know,” she said. “We’ll be able to pick it apart.”
Orange County remains an attractive place to do business, primarily because “it is a nice place to live,” but too-rapid growth and traffic congestion is perceived by some manufacturing and engineering executives as eroding the quality of life for their employees, according to the survey.
Although Pearce said she cannot yet draw any firm conclusions from that portion of the study, she believes there is cause for concern, especially because many large Orange County companies are not shackled to heavy capital equipment that would preclude them from moving to other areas.
By contrast, service-related companies cited Orange County’s rapid growth as a plus for them, Pearce said. The more people pouring into the county the better, because all are potential customers or clients, service company officials said. Increased competition was cited as the biggest drawback those companies face.
The $70,000 survey deliberately bypassed Orange County’s smaller companies, because such firms tend to be more difficult to find and survey, Pearce said. Moreover, by targeting the largest concerns, survey takers hoped to reach the largest employers, she added.
As a result, only one construction company and just three transportation-related concerns were included in the survey. By contrast, 36 manufacturing companies and 27 service-related firms were included.
DOES YOUR COMPANY EXPECT TO DO BETTER OR WORSE IN 1987, COMPARED TO 1986?BETTER . . . 79% WORSE . . . 6% SAME . . . 15% Source: UC, Irvine’s Orange County Business & Economics Studies Program IS ORANGE COUNTY BECOMING MORE OR LESS ATTRACTIVE FOR YOUR FIRM?
DON’T MORE LESS SAME KNOW MANUFACTURING 20% 49% 31% ---- SERVICES 52% 20% 24% 4% ALL RESPONDENTS 35% 30% 33% 2%
