COMMENT: Looking (Relatively) Good
by Rick Reiff
LET’S START AN UNCERTAIN NEW YEAR ON A POSITIVE NOTE:
As detailed in last week’s preview issue, the signals for 2002 are mixed. Without question, OC has succumbed to the same economic slowdown that is gripping the state and nation.
But while we hunker down for what could be a few rough months, it is worth noting that Orange County appears to be in much better shape than it was during the last national recession, in the early ’90s. In fact, while the nation and the Bay Area are definitely in recession, leading local economists suggest that OC isn’t. They’re forecasting that the county will get through the new year without dipping into a recession, albeit with growth slowing to a relative snail’s pace.
Sure, it’s tough for most manufacturers, retailers and commercial real estate people right now, but the housing market has remained vigorous and certain segments, such as biomedical and defense contracting, look robust.
Take Irvine’s Parker Aerospace, a unit of Cleveland-based Parker Hannifin Corp. As Chris Cziborr reported on Dec. 10, the company expects some $700 million in revenue over the next 12 years from making parts for the F-22 fighter jet, and in the even longer term (through 2021) it expects to see $5 billion in work from the F-35 program. Overall, Parker officials said they see their military business rising to 5% of revenue this fiscal year, but spiking to more than 50% of revenue when the F-35 ramps up in a few years.
But it’s hardly back to business as usual. Unlike the slow, bureaucratic operations that so many of them were 10 years ago, the county’s defense contractors today are a group of lean, precision manufacturers who appear capable of adjusting their workloads between the military and commercial sectors as the need dictates. You see similar resiliency in the local office market: Having learned some hard lessons about speculation in the last downturn, the office market isn’t burdened by anywhere near as much empty space in this cycle.
Overall, OC’s economy is stronger and more diverse than it was 10 years ago. In fact, OC looks like the envy of most any other place you could point to. Sure, we love our high-tech companies and we’re encouraged at some signs that suggest their current travails may be ending. But become another Silicon Valley? Who wants to be that anymore?
Again, we’re not starting 2002 with a bang. But we’re not starting with a thud, either, and as things go, that’s quite an achievement.
,Rick Reiff
TWO-PAPER TOWN
Times, Nov. 12, front page:
Bush Still Had Votes to Win in a Recount, Study Finds
Register, Nov. 12, front page:
Revisited recount still inconclusive
* * *
Register, Nov. 6, Business page 4:
Cisco’s profits take a tumble
Slow demand drives its sales down 32 percent
Times, Nov. 6, Business page 1:
Cisco Sales Better Than Expected
