O.C. Is in Position to Reap Riches of High-Tech Harvest
A generation ago, it was bean fields and orange groves. A decade ago, it was aerospace plants and real estate developers. Now at the dawn of a new age, Orange County is positioned in industries that are expected to explode in the next decade, including biomedicine and multimedia.
The county has developed a diverse business community, a highly skilled, well-educated work force, and universities that are quickly rising in international stature.
“It’s now Orange County’s turn to be the spectacular growth center,” said Fred Rogers, president of Select University Technologies Inc., a Newport Beach firm that licenses and commercially handles university-developed technologies.
“Everything you need to be a player in the technological world of the 21st century is here.”
But whether the county makes the leap from promising--yet still second-tier--business center into an economic powerhouse is by no means certain.
It’s going to mean attracting and retaining the bright minds and big money needed to lead the march into the future, experts say.
It will hinge on whether the county can preserve a high quality of life, whether the workers of the future can afford the houses of the future. It will require an efficient transportation network, good schools and coordination among the diverse, fractionalized business interests.
Finally, the county’s transformation into a world-class economic success also will depend on whether it can shed its image as a bland suburban development south of Los Angeles, and become known internationally as a place where entrepreneurial risk-taking is celebrated.
If all the elements line up correctly, Orange County could become one of the hottest, most happening spots on the planet.
“We’re like a teenager,” said Gary Liebl, chairman of computer accessories maker QLogic Corp. in Costa Mesa. “We’re full of energy, ideas and idealism, but we haven’t fully implemented our potential.”
In the next five years, the Orange County economy is expected to continue outpacing the nation, and to rival Silicon Valley in key measures such as employment growth, housing appreciation and personal income levels.
Mind-boggling advances in practically every industry are likely in the coming years, creating enormous opportunities for businesses. Experts predict that technology will reshape the job market.
Assembly line workers will be highly skilled technicians, conversant in the latest factory automation technologies. Health care workers will be trained to provide genetic counseling, monitor tiny computerized medical devices and use imaging technology to treat patients thousands of miles away.
By 2003, economists forecast that payrolls in the county will swell by another 142,000 jobs to more than 1.4 million, double the projected national growth rate.
“People in Orange County have not really paid attention to the fact that they’re sitting on this dynamo,” said UCLA geography professor Allen Scott, an expert in urban development. “What you’re going to see is this advance across a broad front of flexible, dynamic, leading-edge industries.”
Developments in Science, Medicine
Industries, Scott believes, such as those emerging from the life sciences arena.
The future is likely to bring astonishing advances in health care, from new treatments for life-threatening diseases to the manipulation of genes to reduce or even eliminate certain infirmities.
Orange County could give birth to some of these remarkable developments. Its growing base of biomedical entrepreneurs and the research capabilities at UC Irvine provide a fertile field from which such innovations might spring.
UCI researchers already have developed a number of treatments for Alzheimer’s disease, all of which could be spun off into commercial ventures. Other research on aging--a prime focus of health sciences heading into the 21st century--could fuel local business growth. Studies into molecular structure could intersect with computer technology to produce miniature medical devices that will lengthen and improve lives.
Information technology is another area where Orange County is poised to excel, from its growing communications industry to its fast-developing hub of industrial automation software expertise. Scores of small multimedia firms are designing computer games, digital effects for Hollywood, and remote learning systems.
John Lemieux Rose, president of Media Enterprises, an Anaheim-based multimedia firm, sees the area as “ground zero, the epicenter of digital production.” Even now, he said, many of these young firms are reaching a pivotal point in their growth where entrepreneurs are ceding control to professional managers--a step that typically signals an evolution to a larger, more established industry.
The third area in which the county could make its mark is more conceptual but no less real in its economic potential: the marketing of the Southern California lifestyle and its unapologetic consumerism. It’s already visible in the large apparel industry that’s grown up in the area, much of which has its roots in the surfing and skating culture, including such names as Quiksilver, Billabong and Rusty Apparel.
It’s now moving into other areas, as evidenced by Ford Motor Co.’s relocation of its Lincoln-Mercury division to Irvine last summer. The historic move--the first by a domestic auto maker out of the Detroit area--has been widely heralded as an acknowledgment of Southern California’s creative and technical talent and its importance in dictating consumer trends. It follows the establishment by several Asian car companies of their U.S. marketing headquarters in Orange County.
Many believe that corporations from all manner of industry and from all over the world will increasingly locate their design and marketing operations in Orange County as a means to tap into new ideas and trends, and to continually monitor the pulse of consumer demand.
Cornerstone of Information Advances
In a broader sense, experts say, the most meaningful sign of a bright future for Orange County is its effective transformation from a land-based economy--agriculture and real estate--into a knowledge-based economy--high-tech and professional services.
That’s no small matter considering that in the coming decades concepts will go from drawing boards to marketable products at unimaginable speeds.
Historians today describe four great ages of mankind, starting with the hunting and gathering stage, which lasted millions of years, followed by the agricultural age, which spanned thousands of years. The industrial age lasted about two centuries, and the current information age will probably be no more than 60 years.
There could be five or more ages collapsed into the next century alone. Whole industries will arise and die within each one, to be followed by new business paradigms based on technologies and scientific breakthroughs yet to be conceived.
“I could not have imagined what happened with the Internet, even three years ago,” said Mark Zandi, chief economist at Regional Financial Associates in West Chester, Pa., a research and consulting firm that studies Orange County and other local economies.
“There are businesses that will pop up over the next 10 years that we can’t even fathom.”
In the next few years alone, observers imagine Orange County firms being involved in the commercialization of space, in developing new materials and techniques to make everything from more efficient aircraft to golf balls that fly higher and farther. They could help develop the successor to the personal computer, which will likely evolve into a much different machine in the coming years.
Companies like Irvine-based chip maker Broadcom--and others that are just now getting started--will likely be players in helping push the movement of information over electronic highways at speeds only dreamed of today. And local businesses could be leaders in exploiting advances in wireless communications, using them to, say, revolutionize education or medicine.
“Call me back in the year 2001 and I bet we’ll have a conversation about a dozen companies that are into the conversion of waste” into energy and other usable products in Orange County, Rogers said.
It will happen here, Rogers said, not so much because of any regional technological edge, but because California’s huge consumer and industrial marketplace and penchant for innovation make it the ideal place to test new products and processes. Also, the county’s rich talent base in science and engineering will continue to attract the entrepreneurs who will need a broad range of skilled workers, he believes.
Challenge to Reconcile Business, Community
Whether any of this comes to pass remains to be seen.
Many challenges lie ahead. They include the usual litany of obstacles to economic growth--traffic, high housing costs, worker shortages. Reconciling an increasingly diverse population and business community will be critical.
Notably absent to date has been a tradition of cooperation--among the county’s various businesses interests, as well as politicians and educators.
“In the Bay Area, they’re very good at building public-private associations in support of economic development,” noted Scott.
“We’re very bad at that. Entrepreneurs in Orange County have not yet come to the realization that their individual destiny is tied up with the destiny of every other entrepreneur in Orange County.”
In large measure, the problem is simply one of immaturity. Silicon Valley has had more than 40 years to achieve a level of economic sophistication unparalleled in the world. Orange County’s latest incarnation is barely a decade old.
Despite its economic strength, the county still has few large, market-leading companies. Only seven Fortune 500 companies are headquartered in Orange County, a meager number compared with many major metropolitan areas.
Instead, the economy remains rooted in small and mid-sized companies. Taken together, these firms make for a dynamic business sector, but one that lacks a unifying theme or an easily identifiable source of power. It’s the industry giants that produce celebrated business leaders such as Microsoft’s Bill Gates or Intel’s Andy Grove, act as breeding grounds for future entrepreneurs, and serve as focal points for a community.
Universities Play an Important Role
Recently, there have been indications that the county’s business sector might be coming into its own. One of the most important developments comes not from industry itself, but from UCI.
Universities can be important catalysts for economic growth, by feeding companies graduates in research and technology. Virtually every high-tech hub has at least one major university nearby, including the Bay Area, Boston’s Route 128, and North Carolina’s Research Triangle Park.
UCI, however, just 33 years old, has been regarded as a second-tier institution, and to date it has had few ties to the business world.
That is changing. UCI’s business and science programs have leapfrogged in national rankings, and its current administration is being praised by local executives for opening a dialogue with the corporate sector.
There’s also good reason to believe that out of the crowd of small and mid-sized companies in the county, at least a few will break into the big leagues in the next several years. Broadcom, for one, is the object of high expectations among investors, and is being touted by some as the high-tech world’s next Intel.
Signs of progress are visible in other areas, such as the growth of the Irvine Spectrum.
The Irvine Co.’s Dick Sim, president of its investment properties division, recalled his doubts about the wisdom of trying to create a high-tech center from scratch back in 1984. As he looked out over the bean fields that were being plowed under to make way for the office and industrial buildings that were to become the Spectrum, he wondered how he could create a feeling of urgency and a sense of place in the new development.
Certainly, winning respect for the Spectrum hasn’t been easy, and even today the national media tend to overlook its accomplishments in favor of other high-tech centers such as Austin, Texas, Seattle and Research Triangle Park. “God knows, we tried to get the publicity,” Sim said.
Even so, in its 14 years the Spectrum has developed at double the pace Sim initially anticipated. It now houses 2,200 firms employing 44,000 workers in fields ranging from biotechnology to surf wear. In another 15 years, he expects those numbers to triple.
One of the older kids on the block, Wonderware, moved into the Spectrum when few other firms were around. It became a local success story--despite some ups and downs--in the field of automation software. Now it’s surrounded by dozens of start-ups, some of them spinoffs by former Wonderware executives.
“You’ve got to give it some time,” Wonderware Chief Executive Roy Slavin said.
Attracting Talent, Investors to County
As the county’s business community matures, local executives are hopeful that it will earn the kind of world-class reputation needed to keep the momentum going. They believe that kind of image will be vital when it comes to attracting the serious money--venture capitalists, investment bankers and deep-pocketed investors--and serious talent--scientists, engineers and seasoned managers--that will give businesses the edge in the fierce global contest that awaits them.
A higher profile would also be beneficial, many contend, because it would give the Orange County business community greater political clout in Sacramento and Washington.
“We need to establish an image, so that people say ‘I want to go there because that’s where it is,’ ” said David Blake, dean of UCI’s graduate school of management.
The Orange County Business Council and other groups have tried to market the county through campaigns with slogans like “Tech Coast” that target the technology industry.
Ironically, one of the most difficult challenges arises from what is perhaps the region’s greatest strength--its wide range of businesses.
Certainly, a diverse economy is far more stable and resilient than one that’s vulnerable to the cycles of a particular industry. But it creates a complicated picture that makes it hard to market and promote.
It has also meant that the region’s various business interests have tended to develop along separate tracks, while networking has been noticeably absent.
Meanwhile, infighting over a proposed new airport for the county at the El Toro Marine Corps Air Station has deepened the divide. Some businesses, like Western Digital Corp., oppose the airport plan while others, led by the business council, argue that it is vital for economic development.
As Ted Smith, chairman of Costa Mesa-based FileNet Corp., said, “We’re all working 24 hours a day and driving down our own tunnels.”
Doug Henton, president of the consulting firm Collaborative Economics in Palo Alto, contends that if Orange County is to announce its arrival as a world-renowned economy in the coming years, it must develop a tradition of cooperation among companies that compete with each other as well as those that don’t. He’d like to see county businesspeople join with political leaders and academics in an effort to improve K-12 education and work force preparedness.
“If you solve that, you’ve solved your major economic development issue,” he said.
“Orange County in the year 2010 will be known as the region that works, as the place where people take care of the community.”
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Job Factory
Orange County’s economy, severely hurt in the early 1990s by defense and aerospace layoffs, has become more diversified and is expected to generate 140,000 more jobs by 2003:
Payroll employment
(in millions)
2003: 1,415,000
Note: 1998-2003 numbers are projections
Where the Jobs Will Be
Orange County jobs projected to have the largest percentage growth from 1995 to 2003:
*--*
Job 1995* 2000* % Change 1. Systems analyst 4,640 7,070 52.4 2. Surgical medical technician 390 580 48.7 3. Computer engineer 2,870 4,160 44.9 4. Metal/plastic tooling machine operator 1,110 1,600 44.1 5. Personal and home-care aide 320 450 40.6 6. Occupational therapist 420 590 40.5 7. Heating, air conditioning refrigeration mechanic 940 1,300 38.3 8. Human services worker 570 780 36.8 9. Insulation worker 1,040 1,420 36.5 10. Amusement, recreation attendant 4,820 6,570 36.3
*--*
* Annual avg.
Sources: Chapman University, Employment Development Department; Researched by JANICE JONES DODDS / Los Angeles Times
LAUNCHPOINT 2000
More information on today’s topic can be found on several World Wide Web sites:
Business Owner’s Handbook: How do you start your own business? Find out through this step-by-step manual that guides you through business plans, financing, marketing, hiring and more, including how to evaluate your chances for success.
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Web100: Access company information, stock quotes, income profiles and recent news for leading U.S. and world companies on the Web, including companies from the Dow Jones and Standard & Poor’s lists.
https://www.w100.com/
A Business Researcher’s Interests: The BizTech Thinking Source: This extensive collection of resources includes a digital library of business articles, reports and news, online discussion forums and a guide for starting internet businesses.
https://www.brint.com/interest.html
Researching Companies on the Internet--A Tutorial: Whether you’re interested in researching an industry, networking through professional associations or even locating sales prospects, this site guides you to the information you need.
https://home.sprintmail.com/~debflanagan/index.html
About the Series
Beyond 2000 is a series of articles that explore how our lives will change in the next millennium. The series will continue every Monday through the end of 1998 as The Times Orange County examines what’s in store for the county in such areas as transportation, education, growth and technology.
On The Internet
The Beyond 2000 series and an interactive discussion are available on the Times Orange County Edition’s Web site at https://www.timesoc.com/ HOME/NEWS/ORANGE/beyond.htm
