No Silver Lining Seen in Economy : Business: Recession’s dark clouds cast a shadow of pessimism over local companies, survey reveals.
The ongoing recession, coupled with deep cuts in defense industry spending, have left South Bay business owners pessimistic about the future, with 15% of them saying they may have to move out of the region to survive, a new survey revealed.
Conducted last month by the South Bay Assn. of Chambers of Commerce, the survey also found that 54% of the 604 businesses surveyed reported a decline in revenue during the past 12 months. Eighteen percent of those surveyed said their business remained flat during the past year, whereas 28% reported an increase.
“We know the state of business in the South Bay. . . . Business is hurting more than it has been in years,” said Leron Gubler, association president.
The survey, which looked at businesses from Long Beach to El Segundo, found that hard economic times have fueled great pessimism about the local economy for the near future. Fully 61% of those responding said they did not expect any change in their business during the next six months, and 19% said they expect it to decline further. Only 20% forecast an upswing, the survey found.
And though some optimism was voiced that things could begin to turn around in the next year, the results were far from encouraging, Gubler said. Fifty percent of the merchants surveyed said they expect business to improve in the next year, but 30% said they think it will remain flat. The remainder said they expect a further decline in sales.
Gubler said the most significant finding was that 15% of the businesses indicated they are considering leaving the South Bay, or California, because of the high cost of living, the cost of doing business here and “burdensome, complex” government regulations.
Those responding to the survey were not asked to identify their businesses, but Gubler said that the most obvious blow to the local economy has been the loss of aerospace industry jobs because of defense cuts. A recent study, he said, found that 26,000 aerospace jobs were lost in Los Angeles County during the past year. And most of those jobs, he said, were in the South Bay.
Noting the aerospace industry’s tailspin, Gubler said, local chambers are alarmed that the next industry casualty here may be the Air Force Space Systems Division--an El Segundo facility that directly and indirectly contributes an estimated $4 billion and 56,000 jobs to the local economy.
Though the Air Force facility survived a recent round of Pentagon budget cuts, it is now contemplating a move out of the South Bay unless state and local officials develop plans to provide housing for about 250 of its personnel and their families, Gubler said. If the facility leaves the area, Gubler said the consequences could be devastating to the South Bay, both in terms of lost employment and the ripple effect on everything from real estate to retailing.
Similarly, Gubler said, South Bay officials are concerned that government regulations and taxes could continue to drive away smaller businesses, whose flight to other areas and other states could ultimately prove every bit as damaging to the local economy as the loss of huge manufacturers.
That concern, he said, was reflected by the survey findings that local businesses are troubled not only by the South Bay’s slumping economy and high costs of living, but by government regulations, taxes and fees. Gubler cited the loss of two small manufacturing businesses that left for other states because, their owners said, they could no longer afford to stay in business here.
“I am not trying to say that the business community wants to do away with environmental regulations. . . . Business in the South Bay also wants a pleasant environment” and quality of life, Gubler said. “But we have to come to grips with the problems that are driving business from our area.”
Businesses’ Gloomy Outlook
A survey by the South Bay Assn. of Chambers of Commerce reflects a widespread pessimism in the local economy. A total of 604 area businesses responded to the survey. Some of the highlights:
+ 54% of those responding say their business has decreased in the last 12 months.
+ 61% said they do not expect their business to significantly improve in the next six months, but 50% said they expected business to improve over the next year.
+ In addition to the slumping economy, businessmen cited insurance, government regulations, and taxes and fees as some of the most significant problems they face.
+ Because of the economic slowdown, 5% of those responding said they are considering moving out of the South Bay, and 10% said they may relocate outside of California. The cost of living and the cost of doing business in the state were most often cited as reasons for relocating.
