COUNTY REPORT / Rebuilding the Economy : Businesses Adapting to a New Climate : Labor: Workers displaced by the devastation of the past four years are shifting gears, striking out on their own or transferring old job skills to new professions.

Three years ago, with defense dollars drying up and the aerospace industry in full sputter, APS Systems traded its swords for plowshares to avoid being ground up by a peacetime economy.

In the same warehouse where it had helped tune the nation’s military engine, the Oxnard aerospace firm began building electric buses. While a neighboring defense contractor shut its doors, APS was busy designing the first battery-powered school bus in the country.

Even as Ventura County was losing about one of every five of its defense-related jobs over the past four years, the changes at APS helped put engineers, machinists and welders to work.

And the same phenomenon of change that gave new life to companies throughout the county was also working at the personal level--as thousands of residents adjusted to the troubled economic times.

For Newbury Park resident John Thatcher, change meant finding a new career. Thatcher will be unemployed in August, when the Canoga Park aerospace company that he joined straight out of high school moves out of state. But, as others, Thatcher is changing with the times, preparing to transfer his skills to the computer industry or another evolving field.

“With my age and where I am in life, they’re not jamming many people into the job market,” said Thatcher, 51. “You learn to adapt and you just pray that the economy is going to take an upshot.”

That might, in fact, be happening. After sliding headlong into the depths of recession, Ventura County’s economy is rebuilding and showing signs of recovery.

There are over 12,000 more county residents working today than there were a year ago. Housing sales are climbing, while unemployment continues to dip. Commercial buildings are filling, with vacancy rates plunging to some of the lowest levels since before the great slump of the early ‘90s.

Building activity is on the rise, as real estate speculators look into the future and for the first time in years don’t cringe at what they see.

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These are some of the classic measurements of economic health. But the local economy also can be measured by how it has adapted to the devastation of the past four years.

In many ways, Ventura County’s economy is being reinvented. New business opportunities are surfacing even as the old ones fold up or move away.

Workers displaced by the economic downturn are shifting gears, striking out on their own or transferring old job skills into new professions. Many companies have survived the hard times by overhauling the way they do business, tying into expanding technologies and service fields that promise to rebuild the economy and lead it into the 21st Century.

And there is growing enthusiasm on the potential for increased traffic at the expanding Port of Hueneme, the possible development of a commercial airport at Point Mugu Naval Air Station and the proposed construction of a state university near Camarillo.

So just how far along is the local recovery?

At a business gathering last month hosted by the Ventura County Economic Development Assn., association board member Bill Simmons summed it up this way: “If there was a 12-step process to (economic) recovery, we would be at Step 1: We now realize we have a problem.”

Others measure the recovery by how businesses have survived the carnage of recent years.

“It looks like the business climate is at least beginning to solidify its losses,” said Mark Schniepp, director of UC Santa Barbara’s Economic Forecast Project. “It is a turnaround, but it’s nothing you should pop champagne bottles over yet.”

Still, even a slight upturn is a welcome break from the four-year barrage of bleak economic news.

Since 1990, the county’s unemployment rate has more than doubled, soaring to a high of 10.4% before settling at its current rate of 8.4%. Retail sales fell 15% while the median housing price plummeted $65,000, a 24% decrease.

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In the past four years, Ventura County has lost more than 10,000 jobs, resulting in a massive restructuring of the county’s work places.

Over the past two decades, there had been a steady increase in the number of firms employing 250 workers or more. But starting in 1991, during the heart of the recession, the number of large firms dropped off dramatically while the number of firms employing fewer than 50 people increased.

“A drastic reduction and downsizing is happening,” explained Jamshid Damooei, an economics professor at Cal Lutheran University in Thousand Oaks.

“It says to me that what we are losing are high-tech wages and that’s going to have an effect on the purchasing power in the county.”

To be sure, the county’s diversified economy has helped it ward off hard times better than many of its neighbors.

Agriculture remains one of the county’s strongest industries, even though last year’s $722-million crop was one of the poorest in years. The Navy remains the county’s top employer, putting to work nearly 15,000 civilian and uniformed personnel at Point Mugu and Port Hueneme.

And tourist dollars continue to pour into the county, especially in the west county cities of Ojai, Oxnard and Ventura.

But it is the east county where the most dramatic rise has occurred.

A collection of recession-proof companies has made a home in the Conejo Valley, bolstering the east county economy with high-tech jobs and paychecks to match.

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Led by Thousand Oaks-based biotechnology giant Amgen Inc., the east county is poised to become a critical biotechnology center, the equivalent of the Silicon Valley to the computer industry, economists and others agree.

Amgen, the world’s largest biotechnology firm, reported revenue of $364 million, and profit of $93.5 million, for the first three months of this year. That translates to a 17% increase in revenue over the same period last year and a 14% increase in profit.

With more than 2,000 employees, Amgen is the county’s second-largest private employer. And the Thousand Oaks City Council recently endorsed an expansion plan that will make room for 6,300 new workers at Amgen’s corporate campus over the next quarter-century.

At the time, council members praised Amgen for bringing so many high-paying, non-polluting jobs into the community.

But Amgen’s success has produced other benefits as well. A steady stream of smaller high-tech manufacturing plants have moved to the area in recent years. Baxter Healthcare Corp. is setting up its first large biotechnology manufacturing plant near Amgen’s world headquarters.

Baxter, which manufactures a protein used to treat patients who suffer from the blood disease hemophilia, hopes to have hundreds of employees at the site by the middle of next year.

Johan Vandersande, Baxter’s vice president of manufacturing, said he knows all too well the lure of Ventura County when trying to attract the best-qualified workers: Baxter’s Los Angeles facility has lost plenty of good engineers to Amgen over the years.

“More people prefer to live in Thousand Oaks than Los Angeles. Can you guess why?” he said. “People like the ocean, it’s not as crowded and it’s a pretty safe community.”

Other firms are also spilling over the line from Los Angeles into Ventura County.

Vacancy rates for commercial properties dropped in the first three months of this year, especially in the east county where many quake-rattled San Fernando Valley firms have come seeking refuge.

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The east county also leads the way in retail spending, with Moorpark, Simi Valley and Thousands Oaks all showing gains over last year.

At the auto empire founded by formeS. Ambassador Robert D. Nesen in the Thousand Oaks Auto Mall, sales are the best they’ve been in years. They’re so good, in fact, that Nesen recently added two new lines--Rolls-Royce and Bentley.

Although Nesen Motor Car Co. recorded more than $200 million in sales last year, Gary Nesen, now president of the firm, said the economic slump choked sales by forcing motorists to hang onto their old cars rather than buy new ones.

“For us, it was never a question of if the economy turns for the better, but when the economy turns for the better,” he said. “I think things have turned to the positive. People eventually will have to buy new cars.”

It is that eternal optimism that continues to draw people to Ventura County, and keeps them here when the going gets tough.

Although the sour economy produced the slowest growth rate in decades, employment officials say many displaced workers are choosing to stay put and hunt for local jobs.

Aerospace worker Thatcher, the Newbury Park resident who will be unemployed in August, declined an invitation to leave the state with his company. He has planted deep roots in Ventura County and has no desire to pull them up.

Evelyn Jeffries feels the same way. After 32 years in banking, she left her job to care for her ailing mother. Now, after five months of unemployment, the 51-year-old Thousand Oaks resident is ready to get back to work, but not anxious to relocate to do so.

On a recent morning, she showed up at the Thousand Oaks office of California Job Search looking for help preparing a new resume.

Company President Peter H. Wolf asked about her job skills.

“All there is is banking,” she explained. “That’s all I’ve done since I’ve been 24 or 25.”

But Wolf poked and prodded, asking about management experience and other skills to help fill out her resume and make it more attractive to potential employers.

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“It’s very important that you position yourself for other industries,” said Wolf, who for 10 years has matched employers with those eager to work. “You have to be able to transfer all of those skills because the banking industry isn’t a great industry right now.”

Indeed, few industries have been harder hit than banking. Four years ago, leaders of the county’s two largest locally owned banks expressed little concern about the economic slump that was just starting to take hold.

Since then, both banks have incurred severe losses. And only recently have they begun to rebound.

Ventura-based Bank of A. Levy last month reported a profit of $1.36 million for the first quarter of this year, its first gain in two years.

“I think we are poised very well for the future,” said Marshall C. Milligan, the bank’s president and chief executive officer. “As the economy improves, we are in position to do a lot of business with existing businesses and new customers, and we are eager to do so.”

Ventura County National Bank recently reported a $114,000 loss for the first quarter of 1994, cutting its losses by $1.4 million over the same period last year.

The bank reported a loss of $12.1 million last year, contrasted with a profit of $685,000 in 1992.

It is Ventura County National Bank’s semiannual business survey that reveals the strongest evidence of a slow but steady recovery. Nearly 70% of the 603 businesses that responded to the survey said they believe economic recovery is under way.

The survey, released earlier this month, revealed strong sales performance and job creation among companies with annual sales of more than $1 million.

More than half the respondents with more than 100 workers reported increased employment last year, and more than 40% predicted they would hire more workers this year.

And in a trend that bodes well for commercial real estate, about one-quarter of the companies with annual sales of between $5 million and $10 million reported they would need to find more office space this year.

“If these trends continue, we should begin to see measurable gains in 1994 and a healthy recovery under way by 1995,” the survey concludes.

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Small businesses were among those hardest hit by recession, according to the survey, and many are still reeling from the effects of four years of trouble.

Yet, the entrepreneurial spirit lives on.

In Oxnard, Louis Carrizales decided to start his own business after getting laid off from Abex Aerospace. The Oxnard company, once the city’s largest private employer, announced in 1992 that it would shut down, putting more than 500 employees out of work.

Carrizales is doing the same type of work Abex had trained him to do, but he’s now doing it on his own. He has even hired his father, a 33-year Abex employee also cut loose last year.

And in Ventura, a mother-daughter team recently opened a coffee shop in a busy shopping center near Ventura College.

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Cafe College Square is staffed by Ruby Perkins and her daughters, Deborah and Diane Claridge. Between them, they have 60 years of restaurant experience.

They possess no fancy business degrees. They pay themselves minimum wage. And they advertise by dragging out a hand-painted sign and setting it by the street.

Even in this unforgiving economy, the women say they are confident they can make their business work.

“You stick it out and you hang on,” explained Deborah Claridge about the family’s approach to rising above the economic gloom. “There’s a lot to say about good, old-fashioned hard work.”

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For years, no one worked harder than those in the real estate industry.

In the mid- to late-1980s, the industry rode a streak of hot sales and fat profits. Then the recession tightened its stranglehold. Housing sales slowed to a crawl and new residential construction dropped measurably.

Today, the industry is just starting to dig out from the downfall.

Ventura County housing sales rose 18% during the first three months of this year compared with the same period last year, the largest quarterly increase since the late 1980s.

More importantly, building activity has started to pick up, with the economy adding more than 500 construction jobs since February.

Despite strict policies enacted to control explosive growth in Ventura County, the issuance of residential building permits countywide jumped by half during the first quarter of this year.

And real estate developers, who track the market the way air traffic controllers track jumbo jets, say they are finally regaining confidence in the economy.

Last month, Winchester Homes proceeded with the fourth phase of a Simi Valley subdivision that stalled years ago when the slowdown hit. Immediately, drywallers and plumbers and tractor drivers went to work. So did sales representatives who show the model homes, and gardeners who tend them.

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Still, the mood is guarded: Until the developer is certain the market has healed, only 15 residences will be built.

“They’ve been sitting on this for awhile, waiting for the economy to get better,” said Dick Moses, who heads the construction crew carving up a hillside that is circled by hawks and chewed by cattle. “I guess it’s looking up.”

Camarillo-based Pardee Construction Co., the county’s biggest housing builder, also is throttling forward with projects put on hold because of the recession-choked real estate market.

“We’re going nuts,” said Bill Teller, Pardee’s project manager for Ventura County. “There has been a marked increase in activity since the first quarter of this year.”

Teller said he sees the economic slump as a needed correction to allow the real value of houses to catch up with their inflated prices after years of double-digit increases.

“We’re watching the market to make sure that what we are seeing are not short-term blips,” he said. “But we see companies moving in, unemployment going down and jobs being created. That makes us optimistic.”

Then there are industries that will never be the same again.

Ventura County’s aerospace industry took the brunt of the economic shakedown, hemorrhaging thousands of jobs over the past four years, more than any other sector of the economy.

Raytheon Co. in Oxnard shut down. So did Northrop Corp. in Newbury Park. Defense contracts were their lifeblood, and circulation was cut off when military spending was cut back.

Stunned at the closures, many surviving firms learned that they needed to change the way they do business to avoid becoming casualties of the Cold War’s end.

Camarillo-based California Amplifier Inc., for instance, used to split its operations between defense work and commercial manufacturing of amplifiers for home satellite television dishes.

But in 1990, anticipating troubled times ahead, the company shifted entirely to the faster-growing non-defense field. Sales have jumped more than 300% in the past three years and employment has grown from 160 to 400.

Late last year, a Ventura County consortium was the first local group to receive a federal grant under the initial phase of President Clinton’s defense conversion program.

Power-One Corp. in Camarillo, the lead firm in a group that also includes Rockwell International of Thousand Oaks, will get $1.9 million to develop small battery-like devices that store electric power.

And in Oxnard, APS Systems has secured contracts of more than $1 million to build electric buses. From a warehouse in the shadow of Oxnard Airport, the company offers one of the best examples of an economy in the midst of rebuilding.

Workers once in danger of losing their jobs now earn a living fashioning sheets of metal into a fleet of energy-saving shuttles, the latest in developing public transportation technology.

The coaches are painted in a giant metal hangar built a few years ago when APS was building trailers to haul M-1 tanks.

Workers here need only look out the door to see what might have been. A little way down the road, the green glass Abex Aerospace complex stands dark and abandoned and choked by weeds.

“I was worried for all of us here,” said Bob Roberts, the leather-faced 64-year-old foreman who orchestrates the machine shop at the APS plant.

“But we saw the writing on the wall. We knew we had to change our ways or eventually close down.”

Ventura County Economy at a Glance

Since the recession took hold, Ventura County’s economy has proven more durable in several areas than that of its neighbors. The following comparison of Ventura, Santa Barbara and Los Angeles counties, and the state of California, demonstrates job losses and measures other key economic factors.

Economic Indicators

% Of Jobs Lost or Gained Between March 1990 and March 1994

Ventura Santa Barbara Los Angeles California Non-Farm -1.1% -3.9% -11.7% -4.0% Manufacturing -8.6% -16.4% -23.8% -15.7% High Technology Manufg. -13.2% -37.1% -41.5% -28.0% Retail -8.4% +3.6% -13.7% -5.6%

Sales

Ventura Santa Barbara Los Angeles California Retail Sales Down Down Down Down between 1989 16.1% 14.8% 19.5% 13.4% and 1993

Unemployment Rate

Ventura Santa Barbara Los Angeles California Feb. 1990 4.3% 4.5% 5.5% 4.9% Feb. 1993 8.5% 9.0% 11.2% 9.8% Feb. 1994 8.8% 9.0% 9.7% 9.0%

Construction permits

Ventura Santa Barbara Los Angeles California Residential Units Down Down Down Down Permitted between 72.7% 59.9% 69.9% 48.6% 1990 and 1993

Office Building Vacancy Rate

(4th quarter,1993)

Ventura: 21.6% Santa Barbara: 12.5% Los Angeles: 19.1% California: N.A.

Housing Prices

Ventura Santa Barbara Los Angeles California Peak Month* $269,711 $257,237 $229,260 $207,220 March 1994 $199,150 $215,588 $191,270 $183,840 % change -26.2 -16.2 -16.6 -11.5

*peak months for median home selling prices were Aug. 89 for Ventura County, Dec. 1989 for Santa Barbara County and May 1991 for LA County.

SOURCE: UCSB Economic Forecast Project

Ventura County’s Commercial Real Estate Market

The vacancy rate continues to fall for the county’s office, retail and industrial buildings, hitting some of the lowest rates since the late 1980s during the first three months of this year.

Vacancy Rate Vacancy Rate % Vacant First From Previous From Previous OFFICE Quarter 1994 Quarter Year West County 20.1% Down 3.5% Down 5.9% East County 18.1% Down 0.6% Down 3.0% Countywide 19.2% Down 2.4% Down 4.8% INDUSTRIAL West County 11.3% Down 0.1% Down 0.6% East County 13.5% Down 1.7% Down 4.9% Countywide 12.1% Down 0.8% Down 2.2% RETAIL West County 8.9% Up 0.5% Down 0.7% East County 6.0% Down 1.7% No change 0.0% Countywide 7.5% Down 0.6% Down 0.4%

SOURCE: CB Commercial Real Estate Group

SALES

HOME SALES

Ventura County homes sales increased 18% over last year, reflecting an upward trend throughout Southern California

Average Price First Quarter

County 1993 1994 Ventura $228,225 $225,845 Los Angeles $232,116 $229,776 Orange $240,663 $238,846 Riverside $146,507 $147,494 San Bernardino $134,355 $132,991 San Diego $199,983 $208,422 Southern California $207,260 $206,697

% Increase Between 1993-1994

In number of homes sold In price of homes sold 18.3% -1.1% 14.1% -1.0% 37.9% -0.8% 33.1% +0.7% 22.9% -1.0% 29.9% +4.2% 23.6% -0.3%

SOURCE: TRW Redi Property Data

RETAIL SALES

Dollars spent on retail items % Change from 3rd (3rd quarter 1993, quarter of in millions) last year Thousand Oaks 259.7 +3.1 Ventura 236.0 +1.7 Oxnard 215.8 -1.8 Simi Valley 125.1 +3.0 Camarillo 50.4 -8.2 Santa Paula 21.2 -10.1 Ojai 13.8 -6.5 Moorpark 12.1 +1.6 Port Hueneme 11.0 -6.7 Fillmore 10.1 -8.1

HOTEL / MOTEL ROOM SALES

City Dollars spent on lodging % Change from 4th (4th quarter 1993, in millions) quarter of last year Ventura* 3.8 +5.0 Oxnard 3.6 +16.1 Thousand Oaks 2.6 -0.1 Ojai 2.0 +11.2 Camarillo 1.6 -9.1 Simi Valley 1.3 +4.0 Santa Paula 0.1 -7.3

* 3rd quarter numbers for Ventura

Source: UCSB Economic Forecast Project

EMPLOYMENT

Top 12 Ventura County Industries

% Change from Number employed the same month Occupation in March last year Services 64,500 +0.9 Government 44,000 +0.5 Retail trade 41,500 -3.0 Durable manufacturing 29,700 -3.9 Agriculture 20,700 -5.0 Finance, insurance, real estate 12,400 +1.6 Wholesale trade 11,300 +1.8 Transportation, public utilities 10,300 -1.9 High Technology 9,900 -2.0 Construction 9,000 +8.4 Non-durable manufg. 8,100 -3.6 Oil and gas 2,200 0.0 Total Ventura County: 246,000 March Unemployment Rate: 8.4% +2.4

Source: UC Santa Barbara Economic Forecast Project

Top 10 Ventura County Employers

(excludes government and hospitals)

Employer Number employed GTE California 2,785 Amgen 2,100 Bugle Boy Industries 2,000 Blue Cross of California 1,100 State Farm Insurance 1,106 Kavlico Corp. 1,000 Martin V. Smith & Assoc. 950 Countrywide Funding Corp. 950 Farmers Insurance Group 885 GTEL 858

Source: Ventura County Economic Development Association

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Sources: AP, Reuters