Chapman Survey Finds Manufacturing Slowdown

After more than a year of explosive growth, Orange County’s manufacturing businesses are starting to slow down, a new survey from Chapman University shows.

The quarterly report on local manufacturers and their attitudes about the economy is still upbeat, but shows that the first-quarter growth rate was the lowest since mid-1996.

Chapman economist Raymond Sfeir models his survey on a similar national study--both use a composite index to track the status of the manufacturing industry. Readings of 50 or more indicate degrees of growth; readings below 50 track the industry’s decline.

For the first quarter, Sfeir reports, Orange County’s manufacturing index scored 57.4. That was down from 63.6 in the first quarter last year, but remained well into growth territory and comfortably ahead of the national index of 53.5. The national index for the first quarter of 1997 was 53.4.

More than 75% of the survey respondents said that production levels for the quarter remained steady or increased, and the same number said their employment would remain stable or rise to handle growing production.

But a third said they processed fewer new orders during the three-month period than in any of the three prior quarters. And slightly more than a third said their inventories of raw materials increased--a sign that the pace of production slowed.

Sfeir says that high-tech and transportation equipment manufacturing outperformed the rest of the industry, while clothing manufacturers did not fare well.

The Chapman survey, launched in 1988, queries purchasing managers at more than 100 manufacturing companies in the county and has provided a fairly accurate look at the industry over the years.

One thing that consistently shows up is that local manufacturers are more optimistic than their counterparts nationally. Sfeir says he has no scientific reason for that, but figures from comments he has fielded from survey participants that Orange County manufacturers have a healthy international customer base.

Manufacturing in the county also is weighted toward cutting-edge products like scientific and medical instruments, computer parts and transportation equipment--goods that are in high demand.

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John O’Dell covers major Orange County corporations and manufacturing for The Times. He can be reached at (714) 966-5831 and at john.odell@latimes.com