Biggest News Was Bad News for Orange County in 1992 : Economy: Whether one blames the Cold War’s end, rising national debt or the L.A. riots, the economy suffered.
This was the year when the 1980s came back to haunt us.
Whether the blame lies with the end of the Cold War, the rising national debt or the Los Angeles riots, Orange County’s economy suffered. It was a victim of past excesses. The recovery never took hold.
Charles H. Keating Jr., former owner of Irvine-based Lincoln Savings & Loan, was sentenced to the maximum: a decade in jail. Glitzy retailers shut down, undercut in a saturated and overbuilt retail market by discount power centers. And the housing market grew even softer, with signs of trouble for the state’s largest home builder, William Lyon Co.
Not all of the year’s top stories were tied to abuses of the past. A top executive stepped down to become a leader of his war-ravaged homeland. And Walt Disney Co. was one bright spot in a rough year for the city of Anaheim.
Here, in order, are The Times Orange County’s choices for the top 10 business stories of 1992:
(1) The recovery fizzles. All doubt was erased: The aerospace industry was in deep trouble. There were layoffs at McDonnell Douglas, Hughes Aircraft and Rockwell International.
The buzzword downsizing could be heard in the halls elsewhere, including Toshiba Electronics, Newport Corp., Sorin Biomedical and just about every home builder in the county. William Lyon Co. announced a major restructuring, and founder William Lyon himself put a huge classic car collection up as collateral. Meanwhile, the Resolution Trust Corp. sold off J.M. Peters Co., a once-thriving builder of pricey homes. And housing prices continued to fall, a predicament for homeowners trying to flee the region for better economies.
Times were just as tough for the retail and tourism industries. The Rex restaurant at Fashion Island closed, replaced by the more economical Hard Rock Cafe. Tourism was flat, despite Knott’s Berry Farm’s new Indian Trails exhibit and Disneyland’s splashy Fantasmic water show. At Disney, several hundred Imagineers--those whose job is designing the theme-park rides of tomorrow--were laid off. And Orange County’s once-vibrant ad agencies lost almost half of their number.
Reflecting all of that, unemployment climbed to as high as 6.7% during the summer after the county lost more than 30,000 jobs. Bankruptcies were at an all-time high, and consumer confidence was at an all-time low. Even executives at an economic forecasting conference, which typically finds the bright side, had trouble putting on a happy face.
One positive note: TRW Inc. agreed not to move its credit reporting unit out of Orange.
(2) Charles H. Keating Jr. is sentenced, and investors are awarded more than $1 billion in damages. Keating suffered two pounding courtroom defeats. Often the Lincoln Savings & Loan chief, whose thrift collapsed in 1989, tarnishing the images of five U.S. senators as it fell, wore an ironic smile, even amid the hoots and hollers of elderly investors who had lost money in Lincoln. And despite pleas from friends and even an aide to the Pope, Keating received a 10-year prison term and $250,000 in fines. Several months later, a Tucson, Ariz., jury awarded plaintiffs a whopping $4.1 billion to be paid by Keating and two others. (The amount was later reduced to nearly $1.5 billion.) Keating investors were jubilant and said that justice was served, even though their faith in financial institutions had faded. Said one, speculating where he’ll put his recovered investment: “Maybe under the bed.” At year’s end, Keating was fighting additional criminal charges in a federal trial.
(3) Drywallers strike. Hundreds of workers, many Mexican immigrants, went on strike for more than five months to demand a raise, health insurance and, most important, a union. The labor dispute at times turned violent, including one two-hour standoff in which 148 workers were arrested after allegedly storming a Mission Viejo construction site and taking six workers hostage. Serious charges were later dropped. In the end, the workers won and signed a contract with subcontractors serving Southern California’s multibillion-dollar home-building industry. Their victory was surprising, given the troubles unions have had in the past decade.
(4) ICN’s Milan Panic becomes prime minister of Yugoslavia. Orange County’s highest-paid executive of 1991, ICN Pharmaceuticals Chairman Milan Panic, took a leave from his company to become prime minister of his homeland, war-torn Yugoslavia. He survived several votes of no confidence and then threw his hat in the ring in a failed attempt to become the president of Serbia.
(5) Shiley settlement reached. A $215-million settlement of a class-action lawsuit put to rest about 50,000 claims against Shiley Inc., the Irvine maker of a heart valve blamed for about 300 deaths. Yet nearly 1,000 recipients with functioning valves refused to have any part of the agreement, and they vow to press on in court. One group of 333 holdouts later settled for $35 million--between $40,000 and $300,000 per recipient. A trial for the rest is scheduled to begin in July. Meanwhile, the company announced a potential breakthrough in creating an X-ray device that can detect tiny cracks in a valve before it malfunctions.
(6) Thomas Yuen leaves AST Research. Orange County’s brightest success of the past decade, AST Research Inc., made it to the Fortune 500, survived a fierce personal computer war and gave investors some of the best returns of any company in the state. But the big news was the departure of co-founder and co-chairman Thomas Yuen after an apparent tiff with company co-founder Safi Qureshey. Meanwhile, the price war squeezed Amkly Systems Inc. in Irvine, a start-up company launched by another AST co-founder, Albert Wong, after he left AST four years ago. He was forced to lay off most of his staff.
(7) Disney’s empire expanding. Walt Disney Co. tried to persuade the city of Anaheim to help foot the bill for its proposed expansion of Disneyland. And in December, a bargaining bombshell: The company said it plans to bring a professional hockey team to the soon-to-open Anaheim Arena, a move that would save the city millions. Meanwhile, Chairman Michael D. Eisner maneuvered to cash out options and reap $197 million before any potential tax increase by the incoming Clinton Administration. Yet the Disney touch was not so golden elsewhere: Euro Disney, which opened in April outside Paris, failed to live up to expectations.
(8) Takeovers and talks draw attention. Archive Corp. in Costa Mesa was taken over by Conner Peripherals Inc. Bergen Brunswig Corp. in Orange completed a highly publicized, rough-and-tumble takeover of Alabama competitor Durr-FillauerMedical Inc. And Carl Karcher began a campaign to return his company, parent of the Carl’s Jr. hamburger chain, to private ownership.
(9) Republicans rally behind Clinton. Western Digital Chairman Roger W. Johnson and developer Kathryn Thompson broke Republican ranks and defected to Bill Clinton. Die-hard conservatives jeered the two at a post-Republican National Convention press conference, and one congressman hinted that Thompson’s business would suffer as a result. But the two were not intimidated. Waving pompons, Thompson and Johnson appeared at a star-studded rally in Orange County. Still, Clinton failed to win a majority among Orange County voters. Johnson, however, attended a Little Rock election night bash and is rumored to be a contender for a position in the new Administration in Washington.
(10) Shakeup among car makers. Orange County offices of Japanese auto makers had to defend themselves early in the year against a protectionist wave. That sentiment quickly died down, but business was changing in any case. Mazda Motor of America in Irvine pulled the plug on the Amati luxury sedan, Hyundai Motor America got new management, and Daihatsu America Inc. in Los Alamitos stopped selling cars in the United States. But Kia Motors of South Korea set up its U.S. headquarters in Irvine and plans to start selling cars here next year. Meanwhile, the Campbell Mazda dealerships launched a set-price policy: no haggling allowed.
Orange County’s Economy: More Fizzle Than Sizzle
Despite beginning-of-the-year pep talks of a brighter Orange County economy for 1992, things fizzled. Unemployment rose, home prices fell, tourism was flat and bankruptcies were filed at an alarming rate, according to the most recent data available.
*
Unemployment Up
The number of people who lost their jobs steadily increased in 1992, tapering off slightly in July and September with seasonal employment. Jobless rates for 1991 and 1992:
1991 1992 January 4.7 5.4 February 4.8 5.5 March 4.8 5.5 April 4.6 5.7 May 4.8 5.9 June 5.4 6.7 July 5.4 6.1 August 4.7 6.7 September 4.9 6.5 October 5.0 6.6
*Tourism Disappointing
It looked as if tourism would be the one bright spot in Orange County’s economy. But it too was disappointing in the second half of the year. In percentages of hotel rooms occupied: *
1991 1992 January 54.1% 54.5% February 59.4 60.9 March 62.1 62.5 April 63.3 66.5 May 61.5 63.5 June 69.4 70.3 July 75.0 70.4 August 77.7 76.9 September 66.0 65.8 October 68.9 67.5
*Housing Prices Down
The average prices of detached, attached, new and previously owned homes in Orange County continued to take a beating compared to last year.
*
1991-’92 1991 1992 % Change January $256,155 $252,969 -1.4% February 257,741 252,357 -2.1% March 249,560 252,273 +1.1% April 247,941 249,906 +0.8% May 256,007 250,234 -2.3% June 256,558 250,160 -2.5% July 253,865 244,736 -3.6% August 257,682 251,147 -2.5% September 255,745 247,985 -3.0% October 250,324 245,128 -2.1% November 250,828 248,828 -0.8%
*Residential Units Drop
The number of residential units to be constructed has dropped by nearly 6% from 1991. In units to be built:
*
1991-’92 1991 1992 % Change January 129 390 +202.3% February 313 424 + 35.5% March 770 692 - 10.1% April 579 687 + 18.7% May 1,160 387 - 66.6% June 1,132 901 - 1.3% July 490 649 + 19.9% August 407 435 + 6.9% September 383 334 - 12.8% October 311 442 + 42.1% Total 5,674 5,341 - 5.9%
*Sources: California Employment Development Department, PKF Consulting, TRW REDI Property Data, Construction Industry Research Board
Researched by DALLAS M. JACKSON / Los Angeles Times
