County Measures Up as Site for Locating New Business

How does Orange County stack up as a business location next to other favored spots around the country?

Pretty well, said Jim Renzas, senior manager at KPMG Peat Marwick in Costa Mesa.

Renzas compared the county with six other hot business addresses--Albuquerque, Phoenix, Las Vegas, Austin, Denver and Salt Lake City. He found that Orange County scored very high on several key issues, including air travel access, proximity to the Pacific Rim and size and skill levels of the work force.

“Basically, everything you need to run a 21st century kind of business is here,” Renzas said.

The bad news, he said, is that the costs of doing business here are still disproportionately high. The lengthy and expensive construction process alone is enough to deter companies from locating or expanding here, he said. “When you have a product with an 18-month life cycle and you lose a year getting a building done, that’s not going to work.”

The most critical shortcoming, however, is that the public education system falls behind in some key areas. While the county has an extremely high level of college graduates, a knowledge gap will start to emerge if primary and secondary schools aren’t bolstered through the cooperative efforts of educators, government and business, Renzas warned.

Without skilled workers to fill the high-tech offices and plants of the future, manufacturers will look to other areas.

“The biggest danger is getting into the situation where we have a two-tiered economy,” Renzas said. “You have knowledge workers, then other workers below who don’t have education and training. You’re sowing the seeds for social instability.”

Consumer Spending Expected to Pick Up

Orange County’s taxable sales by retail stores have steadily increased throughout the decade to $19.5 billion in 1996, up 11% from $17.5 billion in 1990.

But adjust for inflation and the numbers tell a different story. The county’s taxable sales by retail outlets last year were an inflation-adjusted $12.4 billion. That’s below the $12.9 billion in adjusted sales in 1990. Both sales figures are expressed in 1982-84 dollars.

What this means, said Jack Kyser, chief economist at the Los Angeles-based Economic Development Corp., is that consumers have opened their wallets very slowly after snapping them shut during the recession and county bankruptcy earlier in the decade.

That began to change in 1996, and this year the recovery should be complete, Kyser said. The county’s strong employment market, improved housing outlook and new business development in and around the Irvine Spectrum have fostered a renewed optimism among consumers, he believes.

“In 1997, you will finally get back to that pre-recession level,” he predicted.

Only 26 Places in U.S. Better Than This

Gary Miller, senior vice president for marketing at the Orange County Business Council, was quick to put a positive spin on Orange County’s rating as 27th in Money magazine’s annual “best places to live” list. Last year the county placed 60th.

Because the cost of living is so high here--a big negative factor--the county must have rated highly in other key areas, such as good schools, low crime, and clean water and air, he said.

Besides, Miller said, some of the county’s biggest rivals for business were ranked lower, including areas in Oregon, Utah, Texas and Arizona. “I’d rather be sitting on top of them than below them,” he said.

Surprisingly, the Los Angeles/Long Beach region placed higher than Orange County, at 22nd.

Number 27 is not exactly the glowing endorsement the county received in December, when the 1997 edition of Places Rated Almanac named it the best place to live in North America, while Los Angeles County, at 34th, was deemed “extremely abnormal.”

The top spot among the 300 metropolitan areas in the survey went to Nashua, N.H., followed by Rochester, Minn., and Monmouth/Ocean counties in New Jersey. The only California area to make the top 10 was San Jose.

Patrice Apodaca covers economic issues for The Times. She can be reached at (714) 966-5979 and at patrice.apodaca@latimes.com.