When Chapman University issued an upbeat forecast on job growth in Orange County last month, it likely raised some eyebrows among those grappling with a slowing economy and their own efforts to cut costs.
While Chapman did revise its 2001 job-growth rate down from nearly 4% to 2.4%, or by about 14,000 jobs, the school’s economists still see OC’s economy generating 33,500 new jobs this year for a total of 1.4 million. That’s despite some high-profile technology layoffs and the completion of construction work in Anaheim.
The service sector is expected to account for 18,000 of the new jobs by expanding 4.1% this year. But the tail-end of hiring for Walt Disney Co.’s California Adventure is expected to account for most of the new service jobs, according to Chapman.
At a 5.3% job-growth rate, construction is expected to be the fastest-growing sector, adding about 4,250 new jobs. Even with a tough comparison to last year,when OC added 5,875 new construction jobs,one building executive said he expects continued growth.
“We don’t see a slowdown this year or next,” said David Seastrom, vice president and regional manager of Turner Construction Co., a unit of Dallas-based Turner Corp. that worked on Disney’s Grand Californian Hotel among other OC projects.
While construction related to California Adventure has wrapped up, work on schools and development of healthcare centers and some office and industrial buildings have offset the loss of jobs in Anaheim, he said.
“The workforce in Disney California has been absorbed by other projects,” Seastrom said.
G.U. Krueger, vice president of market research at Irvine-based residential development investor Institutional Housing Partners Inc., calls Chapman’s job-growth projection “doable.”
“We have already added 42,000 jobs for the May-over-May period,” Krueger said. “The lower forecast of 33,500 new jobs means they (Chapman) are assuming a further slowdown to come.”
So far this year, OC’s economy has held relatively strong amid an economic slowdown that has hit other parts of the U.S. even harder. According to the Anderson Business Forecast from the University of California, Los Angeles, OC’s 2.5% unemployment rate is the lowest among major regions.
“Orange County has a diversified economy,” said Tom Lieser, a senior economist at UCLA.
Even so, only a few sectors of the local economy are expected to create jobs this year. Besides construction, “The only positive is the defense spending,” said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman.
For one, the Air Force’s new fighter jet, the F-22 Raptor, is expected to bring $1.2 billion in work to OC in the next decade. Irvine’s Parker Aerospace, a unit of Cleveland-based Parker Hannifin Corp., is getting the lion’s share of the work, while several local subcontractors also are getting in on the F-22.
One variable is global trade, according to International Housing’s Krueger. Back in the early 1990s, exports helped bail OC out of recession. This time around, though, global markets aren’t growing like they were a decade ago.
“We are trading with Asian and South American countries, most of which are already in a recession,” he said. “Japan is in a recession while Singapore is on the brink. Brazil could explode anytime.”
Technology is expected to continue its downward trend in employment generation. But despite a rash of layoffs, the sector is expected to employ just 200 fewer people in 2001 than it did last year. In 2000, tech employed 63,625 people, or 375 fewer people than it did in 1999.
“The weakest area will be manufacturing,” said Chapman’s Adibi, who sees the sector growing less than 1% and adding about 900 jobs.
“The numbers that we are looking at right now are pretty bad, but it is a reflection of the business condition that has prevailed,” said Anil Puri, dean of business school at California State University, Fullerton.
Puri, who came out with his forecast in May, had projected a job growth rate of 2.7% for OC this year.
“Old, reliable companies are going to pull us through,” he said. n
