OC Executives High on 2004; Workers’ Comp a Big Worry
By ANDREW SIMONS
Orange County executives expect a good 2004, with one big caveat.
High workers’ compensation premiums and living costs, along with state and local taxes, could hamper economic recovery here, they say.
That’s according to a survey done by Deloitte & Touch LLP with the Orange County Business Journal. The survey queried executives at 112 companies here,small and large,to assess their outlook. The survey was done in September and October.
First the good news: The outlook is bright.
Fifty-eight percent of respondents said they expect improvement in the economy here next year, while 5% expect significant improvement. A little more than a third of respondents said the economy would stay the same. Only 2% predicted it would worsen.
Mirroring optimism about OC, 79% of respondents said the U.S. economy would improve in the next year, while 20% said it would remain the same and 2% predicted it would get worse.
Likewise, nearly 88% of respondents said they expected higher sales next year, thanks to renewed demand, as well as new products and services.
But optimism was tempered by the high costs of doing business in California. At the top of the list: workers’ compensation costs.
Nearly 85% of respondents said the high cost to insure their workers was the biggest challenge facing their businesses.
“It’s my biggest concern,” said Jim Peterson (photo), chief executive of Irvine chipmaker Microsemi Corp. “The cost of insurance is 20% over other states. We have to work extremely closely with the governor’s management team, which is Arnold right now.”
But workers’ comp costs weren’t the only factor sacking sentiment among OC executives. About 70% said the high cost of living in OC,predominantly soaring housing prices,was a big factor in the area’s competitiveness.
“People who move here can’t get a house comparable to what they could get somewhere else,” Peterson said. “We have to keep pitching candidates on the weather and telling them that the beach is close and Disneyland is close.”
OC executives said they plan to spend money next year. Forty-two percent of respondents said they would invest in marketing and sales, while 38% said they would spend on technology.
More than half of respondents said they would hire more people,28% said they see an increase in staffing of 1% to 5%, while 24% said they would increase staffing by more than 5%.
Nearly 30% said they would stay at current employment levels, while 10% predicted a decrease in workers.
