ORANGE COUNTY VOICES ECONOMY : Losing More Than Manufacturing : Industries’ flight out of the area affects more than just those businesses.

“O.C.’s Economy Hurt by Loss in Manufacturing” was an ominous headline that startled many readers in a recent edition of The Times. The story reported on Chapman College professor Jim Doti’s midyear update of the county’s economic outlook and noted that the continuing movement of manufacturers out of Orange County is having a more negative impact than the loss of defense-related jobs from federal budget cuts.

Last Thursday another story related how the state of Oklahoma had set up an office in Orange County to lure Southern California businesses to Oklahoma.

Should “manufacturing flight” concern us? Figures indicate 21% of Orange County jobs are in manufacturing--a significant number in itself, but substantially more so considering that five non-manufacturing jobs are dependent on each one in manufacturing.

Most Orange County businesses operate in a regional economy, if not a national or international one. If you were to rank Orange County as a country in terms of its gross national product--$50.8 billion annually--it would be 33rd in the world, wedged between Yugoslavia and Thailand, according to recent government figures. Despite a slowdown in the rate of growth, our local economy still appears to be in significantly better shape than does that of “the near recession-like national economy with low productivity levels and a core rate of inflation that remains stubbornly high,” according to the Doti report.

But it is a mistake to ignore the signal that some manufacturers are giving us by relocating or not expanding here. It is unlikely that the strength of Orange County’s economy can be sustained without a significant manufacturing base. Our challenge will be to re-create an environment conducive for manufacturers to locate and expand their facilities here.

The Chapman College report cited high labor costs and the difficulty of meeting costly and ill-defined environmental standards as key reasons for “manufacturing flight.” If examined closely, those high labor costs relate largely to our high housing costs and our transportation mess.

A key factor in the location of any manufacturing plant is the availability of an adequate work force. We need to do a better job of ensuring that housing affordable to the work force is met.

We need to improve our transportation network, not just for our own convenience, but to ensure that our workers can reach their place of employment in a timely and cost-effective manner and in an unfrazzled state of mind.

We need to provide our educational system, from the primary grades through to our community colleges and universities, greater support.

We must also pay closer attention to new regulations to assure that they do not create, or are perceived to create, an onerous impact on manufacturers.

Homes that sold for under $20,000 in the mid-1960s now sell for $250,000. While we can’t expect to see a return to home prices in five digits, with far greater production we would not see housing prices outstrip salaries and thus affordability to our workers.

The voter approval last June of Propositions 111, 108 and 116, the gas tax and rail bond measures, was encouraging. But we still have a long way to go to solve our traffic congestion. The county’s 20-Year Master Plan of Transportation improvements identifies needs costing $3.1 billion. It is critically important to find ways to finance these improvements if we are to move our employees to and from work, our sales forces to their next appointments and our raw material and finished products to their destinations.

Great caution must be used in the regulatory arena. Few would argue with goals to clean the air, protect the ozone, better manage our transportation network and dispose of our wastes. But if the regulators are overly zealous in their methods for achieving such goals, the cost, both real and perceived, may be the loss of additional manufacturing jobs. Our elected policy makers, in their zeal to appeal to certain constituents, may send a message to companies that doing business in Orange County can be hazardous to their businesses’ health. Isn’t it possible that a carrot approach rather than the big stick might accomplish the desired result and even stimulate job growth?

Our educational system is overloaded with too many students per classroom, underpaid teachers and a lack of vocational education. If the costs of housing and transportation remain high, we will become increasingly dependent on a locally generated work force. And in our society of increasing technology and communications, a work force that can effectively communicate and has an appropriate work ethic and technical skills will be critical.

Orange County has an economy that is the envy of areas throughout California, the United States and the world. We can be the gateway to the Pacific Rim. We can be very proud of the growing number of prestigious law, finance, science, light industrial and research companies as well as the significant number of firms in the hospitality and retail trade, which add significantly to the county’s economy.

However, let us not ignore the signals of “manufacturing flight.” To ensure Orange County’s continued economic strength, let’s get serious about housing for our work force, an improved transportation system, support for our educational system and a reasonable regulatory environment.