Small Firms Say O.C. Bankruptcy a Blow

Orange County’s bankruptcy has dealt a stunning blow to small companies that were just beginning to recover from the recession, and it threatens to nip a growth spurt in the bud, according to a UC Irvine survey released Tuesday.

Particularly for small, privately held firms such as construction companies and retailers, Orange County is now a less attractive area in which to do business, UCI’s annual Orange County Executive Survey found.

Before December’s bankruptcy filing, only 30% of the small companies surveyed said the county’s business climate was getting worse. Now 53% say the outlook is worse than in years past, and 57% express dissatisfaction with the county as a base of operations.

“The bankruptcy will stop construction of schools and infrastructure,” said Clay Higuchi, general manager of Standard Concrete Products Inc. in Santa Ana.

“We are hoping there will continue to be work for us in the private sector.”

Many small enterprises rely heavily on government agencies as buyers of their goods or services, and they are scrambling for new customers, Higuchi and others said.

Also clouding their prospects is the possibility that local governments may raise taxes to get them out of their financial difficulties.

“I have thought of the possibility that they may raise sales taxes, and I don’t like it,” said John Campbell, owner of Campbell Automotive Group, a Santa Ana car dealership. “It would impact us more than others, because a slight increase makes a noticeable difference in the price of a car.”

The survey has been done annually since 1986 by the Center for Research on Information Technology and Organizations at University of California, Irvine. This year’s poll included the chief executives of 280 companies.

Orange County companies overall said they made small gains during 1994, and more than half said they are better off now than a year ago.

Most said they are cautious but still hope that the worst of the financial crisis has passed.

Dennis Aigner, dean of the UCI School of Management, said one of the best bits of news disclosed by the survey is that most companies expect no layoffs.

“Employment will probably remain static,” Aigner said. “Companies are saying they can achieve sales growth without cutting jobs.”

* GRIM ASSESSMENT

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