Orange County businesses did their best to get back to normal last week. But many said what they returned to wasn’t so much normality as a new reality in the wake of the Sept. 11 terrorist attacks.
Some businesses barred all but essential air travel. Others scurried to deal with transportation woes stemming from the air traffic shutdown two weeks ago. Many draped giant U.S. flags from their buildings and kept those on flagpoles at half-mast.
Many businesses privately worried about how they’ll make their third quarter numbers after having lost days of sales and other operations during the week of the attacks. For technology companies in particular, the last two weeks of a quarter are critical. Trouble is, few people feel like buying in the wake of the attacks, one source said.
“I can’t imagine companies are spending a lot of time making buying decisions,” said an executive at a publicly traded Irvine technology company who asked not to be named.
The source predicted that references to the attacks would be a common thread in upcoming earnings announcements.
“Everybody’s in the same place,” she said. “Hopefully the marketplace will be somewhat forgiving.”
Another executive who asked not to be named said his publicly traded Irvine company was determined to press on with business last week. The company saw things come to a standstill on Sept. 11. Each day after the attacks, he said, things slowly got back to normal.
“It’s important to focus on our customers and get a sense of normalcy,” he said. “We don’t want to give in to the situation. That plays into the hands of the terrorists.”
Still, the executive said a sense of uncertainty prevailed about the long-term fallout of the attacks and the pending U.S. response.
“Everyone knows the other shoe has to drop,” he said.
A mixture of sorrow, caution and fear reigned across OC last week, which resulted in slower corporate sales, light crowds at shopping malls and some difficult business decisions. Irvine-based Lincoln Mercury, for one, pulled a national magazine ad featuring the Manhattan skyline and the World Trade Center towers.
At John Wayne Airport, Dewain Campbell, president of Costa Mesa construction company Camco Inc., said the terminal was “eerily empty” last week, but catching a flight was a breeze.
Campbell said he arrived an hour before his flight,not the two to three hours recommended. In the case of John Wayne, he called that “hysteria.” Flying out of the airport was as easy as ever, if not more so because of the light crowd, he said.
Here’s a look at how businesses in various sectors fared last week, and how the period compared with the week of Sept. 11.
Technology
When local technology workers returned to work last week, business was anything but usual. Companies of all sizes scrambled to belt-tighten in the face of an exacerbated economic slowdown and to ease personal problems caused in the wake of the terrorist attacks.
“We’re trying to preserve our cash. This could be a longer-term issue and we want to be prepared,” said Manouch Moshayedi, chief executive of Santa Ana-based memory maker SimpleTech Inc.
SimpleTech eagerly awaited indications from its customers about whether they will continue buying components in the critical last two weeks of the quarter. Until then, Moshayedi said he had temporarily halted sales teams and executives from traveling.
“This is both from a safety issue and a logistics issue,” Moshayedi said. “When you do business, you have to get into an airport, go on a flight, get out of the airport, have a meeting, go to the airport and get on a flight all very quickly. That’s going to be a little more difficult now.”
On the flipside, Moshayedi said SimpleTech isn’t planning layoffs and is actually hiring engineers in the coming weeks.
Other tech companies tried to return to business as usual as quickly as they could. Chipmaker Conexant Systems Inc. immediately allowed its executives to travel, despite delays and heightened airport security.
“We’re not going to change our travel schedule. Conexant is a worldwide company,” said Moiz Beguwala, vice president of Conexant’s wireless division.
One harsh reality facing OC tech workers was the potential for racial attacks against ethnic and religious groups perceived to be responsible for the terrorist attacks. Most OC tech companies had some sort of counseling available to employees and said they would be proactive in responding to any threats workers of Middle Eastern decent received.
Some took preventative measures. One company, which asked not to be named, removed the biographies and names of their executives from their Web site. The officials are of Middle Eastern descent.
“They’re sheepish about their names right now,” a spokesman said. “We want to keep things subdued. We have to be concerned about safety.”
Broadcom Corp. Chief Executive Henry Nicholas sent out an e-mail message to all employees saying the chipmaker wouldn’t tolerate discrimination.
“We must ensure that we do not allow our anguish to be channeled toward anything other than these terrorists and terrorism in general,” Nicholas said in the message. “Broadcom is a multinational company and we have succeeded because we have assembled one of the most talented, dedicated, and intelligent workforces in the world. As a result, our team is comprised of players with widely diverse citizenship, religious and ethnic affiliation,” he said. “Discrimination is never tolerated at Broadcom.”
,Andrew Simons
Finance
Stock brokers at Newport Center came back to work last week only to confront a plunging market and frantic investors.
Some financial firms said they still were hampered early last week because employees still were stranded in New York. As such, brokers said it might take weeks for things to get back to normal.
Gordon McBean, a consultant at Newport Beach-based Roth Capital Partners LLC, said he was stuck in New York for almost five days after the attacks on the World Trade Center.
“It was a difficult time,” he said.
McBean said he arrived in New York the night before the attacks and was set to return two days later. By Sept. 13, Bean said he and two of his friends decided to rent a car and drove from New York to Salt Lake City, where he caught a flight home.
Steve Gish, a Roth Capital analyst, told of a similar experience. He went to New York on Sept. 10 for a conference and was planning to come back on Sept. 12. Not until three days later was Gish able to get home.
“I was stuck out there,” Gish said. “I took a train to Philadelphia, from where I rented a car and drove to Chicago.”
From the Windy City, Gish said he flew to OC.
“I wore the same clothes for five days,” he said.
Both McBean and Gish were back in the office on Monday. But they said work was far from normal.
With the stock markets closed for four days in a row after the attacks, brokers and other professionals were inundated with phone calls from worried clients.
“We had twice the number of phone calls,” said a broker’s assistant at one large brokerage’s Newport Beach office. “Most of the clients wanted to know what to do in this market.”
Roth’s McBean and Gish expect it will be some time before the markets stabilize in the wake of the attacks and amid talk of a war against terrorism.
“The markets were closed for four days and the last few days were very volatile,” McBean said.
It wasn’t all selling, though, according to McBean. Some institutional clients saw the crisis as a buying opportunity and were bargain hunting when the markets reopened. Retail investors, on the other hand, were on the sidelines, one source said.
,Rajiv Vyas
Professional Services
Aliso Viejo engineering company Fluor Corp. held a welcome-back ceremony on Monday for three of its senior financial executives who had been stranded in New York following the World Trade Center attacks.
The executives had been in meetings on the 38th floor of the trade center’s second tower when the attacks took place. They managed to escape.
“The ceremony gave them a chance to tell their story to everyone at once so that they don’t have to keep retelling it,” said Fluor spokeswoman Lori Serrato. “And it provided a little bit of closure to our employees.”
The executives had been set to fly out of New York the morning of the attacks, and ended up flying back to California three days later.
Fluor also had two company officials stranded in Arizona that have since returned. The company has accounted for all its business travelers since the attacks, Serrato said.
“Right now we’ll have people traveling only if it’s absolutely necessary for business,” Serrato said. “If we’re traveling internationally, we have to contact our head of security so that they know our whereabouts at all times.”
The Irvine office of Pasadena-based engineering firm Tetra Tech Inc. reported a brief slowdown in work immediately following the attacks
“The human interest side of it has caused an interruption from a standpoint of people’s focus with some people not feeling emotionally able to function,especially on the day of the attacks,” said Douglas Reinhard, Irvine-based operations manager for Tetra Tech. “We have a few employees with immediate family members who were in the towers at the time of the attacks and are still missing.”
Reinhard said the company has postponed some business travel.
“Some people at our company don’t want to travel too much right now, and we’ve told our staff if it’s something that doesn’t have to be done right now we can postpone it,” he said.
Tetra Tech has 180 people in Irvine.
,Chris Cziborr
Real Estate
The attacks in New York and Washington, D.C., hit home in OC, according to Sandra Y. Cervantes, a residential real estate agent with Century 21 in Irvine.
“People are scared,” Cervantes said. “It’s a fear of the unknown.”
When the news of the attacks reached OC, prospective homebuyers cancelled appointments, Cervantes said. Cancellations peaked on Sept. 14, though the market remained sluggish last week, she said.
“The people I spoke to were demoralized. There was sadness and a disbelief in what had happened,” Cervantes said.
While activity started picking up last week, things had changed. Some home sellers fear the attacks have had a direct impact on home prices, Cervantes said. Even though interest rates were cut again last week, the mood is grim and sellers are bracing for a financial impact. Some sellers already have cut prices, she said.
Cervantes said one of her clients called and asked her to knock $100,000 off the $1.6 million asking price of a home.
“Now they’re more willing to list their homes below comps to make them saleable,” she said.
There’s been other fallout. On the week of attacks, Cervantes tried to have appraisals done on two homes that were already being sold. The appraisals came in below the negotiated selling prices. Cervantes blames the changed climate.
Now, Cervantes said she is working with clients to change their expectations.
“I’m prepping them ahead of time,” she said. “They need to know that properties will not be selling at the huge, top-dollar amounts any more.”
,Daniel D. Williams
Japanese Companies
Sean Saeki was stunned when he turned on the TV at his Las Vegas hotel on Sept. 11, the day terrorists attacked the Pentagon and World Trade Center.
“I was concerned to hear the reporters saying, ‘This is the biggest attack since Pearl Harbor,'” said Saeki, a Japan native who serves as assistant director of marketing for Canon U.S.A. Inc. in Costa Mesa.
Like thousands of others, Saeki was stranded in Las Vegas while on a business trip. He managed to come back to OC by renting the last car at the airport.
Saeki estimated office efficiency decreased by 40% during the week of the attacks due to employees being stranded.
Last week, several Japanese companies with operations in OC said they had put off all air travel for now. Ricoh Electronics Inc. in Tustin was encouraging employees to make sure they carried mobile phones when “exceptional” business trips were required. And those trips were to be made by train and auto.
Irvine big-screen TV maker Mitsubishi Digital Electronics America Inc. asked employees to minimize business travel “where practical,” said company marketing manager Robert Perry.
“But we do have people going on business travel over the next week or two,” he said.
Unavailability of flights and customs delays hit some companies. At Cypress-based Yamaha Motor Corp., a maker of motorcycles and other products, 15% of the company’s goods are shipped by air. The rest come by sea.
As of early last week, “Our motorcycles in the container are still stuck at the port,” said Shohei Kato, Yamaha’s chief executive.
Once U.S. Customs gets back to the normal, Kato said he fears sorting through the backlog of products could lead to more chaos.
Jim Reilly, a spokesman for Matsushita Electric Industrial Co.’s Panasonic unit, which has operations in Cypress, said the company’s Internet sales have decreased about 25% since the attacks.
“This is a very small but growing percentage of Panasonic’s sales,” Reilly said.
Local travel agencies catering to Japanese businesses and tourists still were reeling last week. According to the Nippon Travel Agency Inc., 5,000 Japanese people cancelled trips to the U.S. in recent days. The two most popular destinations for Japanese visitors to the mainland U.S. are Southern California and Las Vegas.
“This is a tremendous damage to the tourism industry,” said Ayumu Tsunematsu, general manager of Nippon Travel Agency America in Los Angeles.
Some Japanese companies said they anticipate plausible cooling in consumer spending. The events may discourage shopping during the holidays, Yamaha’s Kato said. He estimated that more than 30% of sales of motorcycles for children at Yamaha rely on the holidays. In the worst scenario, Kato said, Yamaha may cut imports from Japan.
Despite the jarring events of Sept. 11, Japanese executives contacted for this story said they plan to stay put.
“I have no intention of going back to Japan,” one said.
,Yoko Ito-Peterson, Chris Cziborr
Retail
Things were far from normal at Il Fornaio restaurant in Irvine.
On one afternoon last week, at a time when the Italian eatery normally would be bustling with lunching businesspeople, tables sat empty.
The situation wasn’t much different at other times last week, according to general manager Frank Licata. Dinner sales not only were down vs. a week ago, but off compared with the same time a year ago.
“It (has been) very tough to gauge,” Licata said of business last week. “It’s really hit or miss.”
Il Fornaio normally sees lighter patronage the week of Sept. 17 due to Rosh Hashanah, Licata said.
But it was uncharacteristically slow, he said, a pattern that started Sept. 11.
Business was off 11% to 12% the week of the attacks, according to Licata, and hasn’t shown signs of getting better.
Immediately following the tragedy, pre-scheduled parties were cancelled, he said. At least one rescheduled for last week.
But events that went on as planned didn’t feel the same, Licata said. A 40th birthday party held for 60 people was expected to last late into the evening with a disc jockey and dancing. By 10:30 p.m., everyone had gone home, he said.
“People are just not ready to celebrate yet,” he said.
Licata said he had a conference call with his partners to discuss how to deal with the situation.
“Our employees are impacted because they live off gratuities and such,” Licata said. “Sales drop, and obviously their gratuities drop. Many of them work two jobs to support their families. They’re concerned.”
Il Fornaio has trimmed back its server count in some instances, Licata said.
“We’re just hoping for the best,” Licata said. “Hopefully people will begin to stray away from their televisions again and get back to the norm.”
Some shopping malls also were slower last week.
Jennifer Smith, a spokeswoman for The Irvine Company, which operates several shopping centers, said “it’s too early to tell what impact (the) events will have.”
A few stores in South Coast Plaza couldn’t clearly gauge business either last week, but store operators said things weren’t quite back to normal. Immediately following the tragedies, portions of the mall closed down, with some stores remaining closed on Sept. 12.
The shutdown impacted sales, and some stores said lighter traffic,and sales,were the norm last week.
“We’re definitely seeing lighter traffic than normal,” said Laura Schmidt, assistant manager at Bath & Body Works. “Our numbers are little bit down right now.”
Patrick Tang, assistant manager at surfwear retailer Beach Access, also said he was seeing lighter traffic, but no dramatic dips since “people were still coming in.”
“This week was a little slower just because back to school is over and everything. In light of what happened there was maybe a drop, but not too much of one,” Tang said.
Traffic was visibly light in the mall, but both Tang and Schmidt said that’s pretty typical for this time of year when retail is between big shopping seasons.
There was one difference: security.
Guards were posted at various points at South Coast Plaza. Schmidt said the mall operator notified tenants that security in the mall had been tightened. Transportation workers bringing in orders would have to show invoices to get near the docks.
“They have all of our docks blockaded off with security guards,” Schmidt said.
,Jennifer Bellantonio
Advertising and Automotive
Orange County’s ad agencies were on high alert following the terrorist attacks.
The Irvine office of Young & Rubicam Inc. was busy making up meetings last week. The ad shop also canceled its end-of-summer party, which was scheduled for Sept. 14. Instead of switching to a later date, the agency opted to donate the money it would have spent on a party to a disaster relief fund.
A spokeswoman said Y & R; continued to monitor its clients, including Lincoln Mercury, which pulled a print ad for the Lincoln LS from all possible national publications after the attacks.
Nancy Carollo, Lincoln Mercury public affairs manager, said the ad featured the Manhattan skyline.
“Our most important thing is to be concerned about the people who are affected and not cause any more anguish by having anything inappropriate out there,” Carollo said. “With everything that’s going on, we’ll review everything on a regular basis.”
But Carollo said there wouldn’t be “any wholesale pulling of ads.”
And like others in OC, Carollo said Lincoln Mercury’s travel plans are “fairly well restricted right now.”
“People are traveling for things that are the highest business necessity right now, and that’s pretty much product launches and quality issues,” Carollo said. “We’re trying to take things on a case-by-case basis.”
Simon Sproule, a spokesman for Jaguar, a Y & R; client and sister company to Lincoln Mercury, said the luxury automaker also is being sensitive. But “business needs to go on,” he said.
Jaguar and Lincoln Mercury dealers made temporary changes to their ads in the past two weeks, with some dealers halting ads and others running public service announcements.
Sproule said Jaguar’s regional retail newspaper advertising will resume this week, as will television advertising,on cable only.
“We won’t be advertising on news channels,” he said.
Auto Dealers
Dealerships across OC saw a drop-off in customer traffic last week as consumers eased off shopping for cars after the Sept. 11 attacks.
But while fewer people were browsing, those that did come to car lots were buying, according to David Wilson, owner of several OC dealerships including Toyota of Orange and Ford of Orange.
“Less people are looking, but a higher percent of those looking are buying,” he said.
Wilson, who said he first learned of the attacks in a store window while shopping in Budapest, Hungary, said sales for the weekend after the attacks were down about 25%. He said he sold 73 cars at Toyota of Orange, instead of the usual 100.
That was a boost after a major slowdown on the days immediately after the attacks, he said.
“Wednesday and Thursday were a disaster,” he said.
Surprisingly, Wilson said there were people shopping the dealerships on Sept. 11, which he believed could have been the result of employers sending workers home.
“Tuesday was almost a normal business day,” Wilson said.
Although sales were still down about 30% as of last week, Wilson said he waiting to see how things play out.
“We’re not laying off anyone,” he said. “But we’re not hiring anyone.” n
,Stephine Michrina
