BUSINESS PULSE : ORANGE COUNTY ISSUES & ATTITUDES : THE KEY WORD IS : QUALITY : Business People Love the County, Faults and All
Its housing prices are out of sight and its freeways sometimes impassable, but business executives say Orange County is still one of the best places in the nation to be.
The county’s economy consistently outperforms the country’s, they say, unemployment is almost non-existent, the populace is well-to-do and willing to spend, and the area is ideal for companies hoping to benefit from burgeoning Pacific Rim trade.
And the weather and the life style--for those who can afford it--just can’t be beat, executives believe.
Their opinions, collected as part of The Times’ executive outlook survey during March and April, provide a broad look at local business leaders’ views of the county. The survey was answered by 562 executives, and additional detail was gathered in more than 50 post-survey interviews.
In all, an overwhelming 92% of survey respondents rated business conditions in Orange County today as good or excellent.
The survey found that while many local executives are concerned about the national economy, a bullish 76% believe that the county’s economy will continue expanding through the end of the year, and 61% expect their own businesses’ financial condition to improve substantially over the next 12 months. And the long-range plans of 76% of the county’s business executives call for expansion of their operations here.
The diversity of the county’s business base is the main reason for the continuing economic growth, the executives said.
Orange County is home to an estimated 80,000 businesses, and almost 95% of them have 25 or fewer employees, according to Contacts Influential, a company that publishes an annual directory of businesses.
And those workers are spread over a dizzying array of businesses, from agriculture to accounting, carpentry to consulting, retailing to rocketry. According to Contacts Influential, there are 8,500 financial, real estate and insurance firms, 44,000 personal and business service firms, 5,500 construction and development businesses, 16,000 retail businesses and 4,800 manufacturers in Orange County.
“If the steel industry gets hit, you’ve got real problems in Pittsburgh,” said Phillip Siegel, president of Consolidated Reprographics in Tustin. “Or if the auto industry has problems, there goes Detroit. But we’re really diverse down here, and I like that.
“If the country goes into a recession, we will feel it much less than the rest of the nation,” said Siegel, who came to the county 25 years ago from Des Moines, Iowa, and said he has no intention of leaving.
When asked to identify the single most attractive feature of Orange County as a business address, 44% said the local economy and a striking 30% said the county’s climate and life style.
But in follow-up interviews, many who had placed the economy first said the quality of life in the county is a prime factor in its economic health. And discussion of life style often drew impassioned responses from otherwise cool, controlled executives.
“The life style here is unbeatable,” boasted Anthony D. Christopher, president of A & J Manufacturing in Tustin and a resident of Corona del Mar. “They envy us all over the country . . . and the girls are much, much prettier here.”
Lifelong county resident Floyd Blower, owner of Pacific Western Container in Santa Ana, said he “would sell out before I would move inland.”
Land costs make it difficult for many businesses to contemplate expansion in Orange County, and “it’s tempting to think about moving to Lake Havasu of some other place where costs are a third of what they are here,” said Donald Ray Williams, owner of Trail-Rite, a boat trailer manufacturer in Santa Ana. “But it was the quality of life that brought me here 22 years ago, and it is the main reason I am still here. . . . Even if the economy changed drastically, I would do anything I could to stay here because of the quality of life.”
But even the most chauvinistic of the county’s boosters readily admit that problems exist: A solid 52% of respondents said traffic congestion and an inadequate transportation system are the county’s worst features. And almost everyone interviewed ranked the high cost of land and housing as a major problem, with 18% placing housing prices ahead of traffic as the worst feature of the county.
According to the U.S. League of Savings Institutions, Orange County was the most expensive housing market in the nation in March with a median cost of $199,900 for all types of homes.
Largely because of traffic and housing concerns, only 35% of respondents said the county is a better business location today than in the past, while 44% said they find the county a less attractive place in which to have a business.
A surprising 11% said their long-term plans call for moving some or all of their Orange County facilities to other counties or even other states.
Most of those who talked about relocating are either manufacturers who need bigger facilities and could not justify buying land or buildings at prevailing Orange County prices or are in businesses regarded by regional air quality officials as sources of pollution. And many of them said that while the factories eventually would be relocated, they intend to keep their corporate headquarters.
While the loss of 11% of the businesses in the county would be a serious economic blow, what the survey does not show is that businesses planning to expand their local operations, combined with businesses that will move into the county from elsewhere, are likely to more than make up for the lost manufacturing facilities.
Still, problems such as snarled freeways and homes that many cannot afford are having an impact on business in the county.
Traffic congestion, the No. 1 sore spot cited by survey respondents, upsets business executives for several reasons. At best, it increases their stress levels, makes employees late to work and eager to leave early, slows down deliveries and irritates customers. At worst, it costs them money and employees.
“We can’t get some of our suppliers to make deliveries before 10 or after 3 because of the traffic,” said Craig S. Miller, owner of American National Watermattress, an Anaheim water bed manufacturer. That, he said, can often translate into downtime for his crews as they wait for supplies.
Jack Enda, senior vice president and regional manager of Stewart Title Co.’s Orange County operations, said that he has seen a couple of employees quit because of stress caused by long commutes.
“About 25% of our employees cannot afford to buy a home in Orange County, so they live outside, in Riverside or Pomona.” Traffic regularly turns what once was a 30-minute commute into 90-minute endurance tests for many employees, he said.
When Peter Ganahl arrives at work most mornings, he wheels his transportation right into his office. The 10-speed bicycle makes commuting bearable for the trim, muscular president of Ganahl Lumber in Anaheim. Ganahl, who says his company’s truck drivers are out in the snarled traffic all day and are constantly complaining about it, classes the county’s “inadequate transportation system” as its biggest problem, followed closely by high housing costs.
For those reasons, Ganahl said, “we pay a premium wage to get good workers in Orange County.”
Williams, the boat trailer manufacturer, said housing costs help create yet another problem--that of finding and keeping blue-collar workers.
Labor problems--shortages, not strikes--were cited by 13% of survey respondents as the least attractive feature of having a business in the county.
Some, like Williams, said the shortages they experience are caused by a combination of high housing costs and the new federal immigration law.
“The bulk of the employees we hire are unskilled and semiskilled, and housing for people in those wage brackets is a real burden,” he said. Additionally, Williams said hiring at his factory is seasonal, with about 20% of his work force being laid off and rehired as demand for boat trailers sinks and rises. “People in that labor pool used to include a lot of undocumented workers, but the pool has shrunk considerably because of the new immigration laws, and it is getting harder to find people.”
Sol Bleiweis, plant manager of Cole of California’s Santa Ana garment factory, said only the newest of his employees earn as little as the minimum wage and that most average $6 to $9 per hour, plus benefits. But the labor market is tight, he said, and he recently has run help-wanted advertisements in papers throughout the county without drawing a single response.
While the problems these executives cite are worrisome, many of the same troubles exist to an even greater degree in most other prime business locations, they say.
Orange County, at least, has a lot of other things going for it: its climate, beaches, recreational facilities and proximity to the mountains and Los Angeles.
“It’s the environment, the best in the world,” Bleiweis said.
Orange County, said lumber company president Ganahl, “has an excellent economy. . . . It is a desirable place to be for commerce. It is wealthy, property values are always rising--and people like to get in on that. And it is in a position to take advantage of the growing Pacific Rim trade.”
Ernest Fenner, president of Specialty Lighting in Anaheim, a nationwide supplier of aerospace and industrial lighting systems, has a much simpler reason for being in Orange County. “I’m here because I like California. We don’t sell a thing in Orange County. We sell only a little in California. But I moved here from Florida 35 years ago, and I can’t conceive of a better place to raise a family and do my business than Orange County.”
To keep that life style, a surprisingly strong majority of the county’s business owners and chief executives say they will vote for the slow-growth initiative that will be on the ballot in next month’s county election, even though they believe that it will have a negative impact on the local economy and on their own businesses.
But the vast majority of the county’s business leaders expect the local economy to keep right on expanding, slow growth or not.
“This economy is already rolling, and you can’t stop it,” said Mark Frazier, president of Barratt American Inc., the Irvine subsidiary of a major British home building company.
“The local business outlook is excellent, and people are not going to use the slow-growth initiative as a self-fulfilling prophesy,” he said. “People are not going to make massive changes in their lives and their businesses because it passes. There is still going to be a good increase in jobs in the county, and that will increase economic growth.”
ORANGE COUNTY’S BEST AND WORST FEATURES
The strong economy is Orange County’s most attractive business feature, but its climate is a close second. The worst feature is traffic.
BEST
Climate: 30%
Economy: 44%
Labor: 9%
Location: 11%
Other: 6%
WORST
Transportation: 52%
Housing: 18%
Economy: 4%
Labor: 13%
Other: 13%
VOTE BREAKDOWN BY COMPANY SIZE, INDUSTRY
Best Feature Climate Economy Labor Location Other NO. OF EMPLOYEES 50-99 28% 49% 7% 12% 4% 100-249 29 42 7 14 8 250 or more 34 42 13 6 5 INDUSTRY Construction 30 53 9 4 4 Manufacturing 38 26 14 17 5 Retail/Service 25 56 7 6 6 FIRE * 33 51 1 11 4
* Finance, Insurance or Real Estate BUSINESS CLIMATE: ORANGE COUNTY VS. UNITED STATES
Excellent Good Fair Poor Orange County 35% 57% 8% 0% United States 9% 70% 20% 1%
