Despite Traffic Worries, Executives Upbeat Over Future, UCI Poll Finds

Times Staff Writer

Most Orange County executives hold an optimistic view of the year to come and expect their companies to grow in 1989, but they worry that traffic and other problems threaten to undermine the county's attractiveness as a place to do business in the future, a UC Irvine poll revealed Wednesday.

Fifty-six percent of the respondents cited the transportation system as the major problem facing the county. The lack of lower-cost, or affordable, housing ranked a distant second, with 12% of the executives citing it as the biggest problem to deal with.

Other concerns included increasing commercial rents and land prices, the overall cost of living in the county and difficulties in hiring qualified workers for many skilled, technical and managerial positions.

For those reasons, 41% of the respondents said they expect the county's attractiveness as a place to do business will decline over the next 10 years--compared to 34% who said they expect the county's attractiveness to increase.

The 1989 Executive Survey and Employment Forecast is based on the responses of chief executives and chief financial officers of 194 county-based firms. The findings showed little change from the university's 1987-88 survey. The findings were also quite similar to the results of a survey of Orange County business executives conducted by The Times early last year.

And as in the previous polls, the problems identified in this year's survey failed to dim county executives' outlook, said Jone L. Pearce, a UCI associate professor of management and co-director of the UCI Center for Orange County Research survey.

Although two out of five executives said the county's business climate will decline in the next decade, only one in 10 said it is "very likely" that their company will move out of the county in the next 10 years. And 48% said it is very likely that their companies will expand in the county.

The fact that 10% of the respondents said their companies will probably move out of the county by 1999 is not disturbing, Pearce said.

The responses, she said, tended to come from older manufacturing firms and businesses unable to afford the county's commercial rents. Their absences will be more than made up for, she said, by the expansion of existing firms and by new firms that either move in from outside the county or are started in the county.

Asked to identify solutions to the county's pressing transportation problems, the executives suggested comfortable standbys: 35% said more freeways are needed, 24% said existing freeways should be widened and 20% said the county should invest in a fixed rail system. People movers, monorails and other more futuristic solutions weren't mentioned with enough frequency to be cited in the survey.

Tolls, User Fees Suggested

Half of the executives suggested tolls or other user fees to pay for improvements in the transportation system, 25% said they would support a sales tax increase and 20% suggested a tax on new construction.

Because job creation is a prime indicator of the direction the economy is taking, the executives were asked for their hiring projections for 1989. Half said they intend to increase employment.

Overall, the executives forecast a healthy 3% increase in the number of jobs available in the county by year's end, Pearce said.

A mathematical forecast prepared by Ralph Catalano, professor of social ecology at UCI, projects that 30,000 jobs will be created in the county this year. That will represent a 2.6% increase from the 1.14 million jobs that existed in December, 1988.

The executives said the most sought-after employees will be clerical, sales and crafts workers and unskilled laborers. A year ago, managers and professional and technical workers were the prime hiring targets.

Although 41% of the respondents said they expect the county's attractiveness to business to decline over the next decade, only 36% said they believe the business climate has worsened in the past year; 33% said it has improved.

Manufacturers Downbeat

Manufacturers--who tend to look for large, unskilled or semiskilled worker pools and low-cost sites for their plants--predominated among those who anticipate or have seen a decline in business climate. Retailers and financial executives predominated among respondents anticipating increased attractiveness to business.

In a measurement of their confidence in the future, leaders of businesses with more than 100 employees awarded the economy a score of 80--the equivalent of a B+. That stands well above the 53, or "so-so" score, recorded in a nationwide confidence sampling by The Conference Board.

And executives of small business and professional services firms--included in the 3-year-old UCI survey for the first time--were even more optimistic. The 20 small-business leaders were asked whether they believe that their own companies' economic performances will increase or decrease in 1989. Ninety percent said they expect increases and 10% said they believe things will stay the same. None anticipate decreases.

In a similar nationwide poll by D&B; Reports, 71% of the small-business executives anticipated increased financial performance this year, 16% said things will stay the same and 13% said they expect to see declining performance.

Lyman W. Porter, a professor of management and co-director of the UCI survey, said that county business executives tend to be highly optimistic because the diversity of the businesses shields the county from the damaging economic crunches that can hit areas where one or two industries dominate.

"And the kinds of businesses that are here--medical and high technology and retail and service--are the kinds of businesses that have done well in the general economy over the last 3 years," Porter said.

HOW EXECUTIVES RESPONDED TO SOME SURVEY QUESTIONS What is the most important public policy issue in Orange County? Transportation:56% Affordable Housing:12% What is the chief impact of the transportation situation on your firm? Hours lost through employee tardiness:36% Difficulty in servicing customers:15% Cost of time spent on transportation:15% What do you believe is the best solution to the traffic situation? Build new freeways:35% Widen existing freeways:24% Build fixed rail transportation:20% How should we pay for traffic system improvements? Toll roads and user fees:50% Sales tax increase:25% Taxing new construction:20% Source: UC Irvine's Center for Orange County Research HOW EXECUTIES OF COUNTY BUSINESSES VIEW THE NEXT 10 YEARS Although 41% of executives surveyed said Orange County will be a less attractive place to do business in 10 years, with 34% saying the county will be more attractive, a strong majority said their businesses are very likely or somewhat likely to expand during that period. COUNTY'S ATTRACTIVENESS IN 10 YEARS More:34% Same:25% Less:41%EXPECT TO EXPAND IN ORANGE COUNTY Very Likely:48% Somewhat Likely:22% Not Likely:30% REASON FOR DECREASED ATTRACTIVENESS OF ORANGE COUNTY Of those executives who said the county will be a less attractive place to do business in 10 years, 33% gave traffic congestion as the primary reason. The percentage of executives citing this reason dropped from 42% 2 years ago. Traffic Congestion:33% Cost of Housing:22%High Land Costs:13%Cost of Living:11% Heavy Local Competition:7% Source: UC Irvine's Center for Orange County Research

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