Oceconomy/15″/dt1st/mark2nd
By ROGER YU
Orange County Business Journal
Orange County’s manufacturing sector will slow sharply this year, the result of a still-ailing Asian economies and the softening of the domestic economy, before expanding again in 2000, analysts say.
Although economic indicators do not yet point to a recession, several forecasts of the Orange County economy all show that 1999 could see the end of seven impressive years of growth. Instead, the forecast is for an almost flat performance.
The non-high-tech manufacturing sector will see slight job growth, according to Chapman University’s Anderson Center for Economic Research, while the smaller high-tech sector will see a slight decline.
More specifically, employment in the durable-goods sector will tick up 0.6 percent and employment in the non-durable goods sector will rise by 1.1 percent, while the high-tech sector will see a 1.0 percent decline.
By contrast, jobs in the high-tech sector grew by 5.6 percent in 1997 and 4.0 percent in 1998. In the durable-goods sector, employment rose by 6.8 percent in 1997 and 5.5 percent last year, and by 2.6 percent in 1997 and 3.5 percent in 1998 in the non-durable goods sector.
The downturn mirrors the projected slowing of the domestic economy, which fueled local growth during the past two years while international markets, particularly Asia, experienced recession. According to Chapman forecasters, Orange County manufacturers must contend with economic growth of only 1.9 percent in 1999, down from projected 3.6 percent growth last year.
The center’s director, Esmael Adibi, said the economy could bounce back by late 1999, and 2000 could be another year of solid growth, especially if Asian nations start resolving their economic problems.
Overall, Chapman predicts Orange County will see job growth of about 1.9 percent this year, or about 25,000 new jobs, compared with an estimated 3.8 percent growth 45,000 new jobs in 1998. The economic team at the California State University, Fullerton, is more optimistic, predicting 2.3 percent job growth in 1999.
“The (manufacturing) sector has seen positive growth so far this year, up to the third quarter, in spite of the occurrence in Southeast Asia,” Adibi said.
Few industries reflect the general manufacturing sector trend better than apparel, whose operations in Orange County are mostly made of enterprising small businesses tapping the fickle surf, skate and snow markets.
Except for one industry leader, St. John Knits, which grew 13 percent in employment in 1997 despite some production problems, the industry is showing signs of exhaustion. Employment is down by 7 percent at the 14 largest apparel companies on the Orange County Business Journal’s list.
And St. John will bear particular watching in 1999. The founding Gray family has launched a $490 million offer to take the company private again.
The move would be one way to mute a recent spate of bad publicity, including continued debate by outsiders over daughter and heir-apparent Kelly Gray’s ability to lead the company, and a nasty legal battle with Amen Wardy Jr., former CEO of the Amen Wardy Home Stores unit.
