O.C. Sees Slump in Manufacturing

After two years of consistent growth, Orange County’s manufacturing activity slowed significantly in the first quarter, with businesses reporting declines in production, new orders and employment, a survey disclosed Monday.

The severity of the slump surprised researchers, who were expecting a less pronounced slowdown.

“The decline has been over almost all industries,” said Raymond Sfeir, an economics professor at Chapman University, which polls Orange County purchasing managers quarterly. “We’re hoping that this is the most severe we are going to see.”

The nation’s sluggish economy was identified as the main culprit behind the local manufacturing slowdown, causing businesses to curtail or cancel orders for products made in Orange County, Sfeir said. Manufacturing represents about 16.5% of the county’s overall economic output.

The survey also found that purchasing managers have become increasingly worried about energy costs.

Still, purchasing managers did not indicate that they expect manufacturing to become increasingly depressed. And recent improvements in the national economy bode well for the local economy, Sfeir said.

The index measuring overall manufacturing activity fell to 43.7 for the January-March quarter from 52.7 in the final quarter of 2000. A number below 50 shows that manufacturing activity is not growing.

It was the first contraction since the final quarter of 1998, when manufacturers were feeling the effects of the Asian financial crisis.

In the Inland Empire, production has been slumping since September, according to the Institute of Applied Research and Policy Analysis, which surveys purchasing managers monthly.

Indeed, manufacturing in the Inland Empire “is at a standstill,” said Shel Bockman, the institute’s co-director. “The economy’s still growing but at a much reduced pace.”