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BUSINESS PULSE : ORANGE COUNTY ISSUES & ATTITUDES : Why Firms Leave: Costs, Traffic, Environmental Curbs

May 12, 1988|LESLIE BERKMAN | Times Staff Writer

Richard Wood figures it is only a matter of time before he moves his bathroom furniture plant from Anaheim to Mexico.

Wood, owner of Gaylan Industries, predicts that efforts to further restrict chemical emissions in the South Coast Air Basin will force him to relocate.

When that happens, he said, nearly all of his 300 Orange County workers will be laid off. About 30 employees will stay on at the company's shipping and corporate headquarters, which will remain in Anaheim.

"Given my druthers, I would prefer to keep everything under one roof here. I'm a San Diego boy who moved to Orange County in the early '60s and to me, this is home," he said.

Like Wood, most chief executives of manufacturing firms in Orange County are not eager to move. But most also believe that Orange County is losing its attractiveness as a place to do business for all but the cleanest and most technologically advanced firms, according to The Times executive outlook survey.

Survey results showed that 67% of the 195 manufacturing executives polled believe that Orange County is becoming less attractive for business, while only 18% said they believed the county is becoming more attractive and 15% said they saw no change.

By contrast, only 21% of executives in retail and service industries said they thought the county was becoming less attractive, while 54% said it was becoming more attractive and 25% said things are staying the same.

And although 69% of the manufacturing executives said they plan to expand their Orange County operations, 18% said they are planning to leave the county. That was a largest percentage among the other industry groups.

A small but steady outbound stream of lower-technology companies--most headed from Orange County to the Inland Empire or south of the border--has been triggered by rising land and labor costs, growing traffic congestion and environmental regulations.

The loss of some manufacturing businesses does not spell economic tragedy. Instead, it denotes "a transition from more traditional manufacturing to a cleaner and more technologically oriented manufacturing," said Mark Mattingly, assistant vice president of Coldwell Banker in Santa Ana.

The county is losing some manufacturers such as wood and fiberglass companies that are trying to shake regional environmental regulations or searching for more plentiful low-skilled and unskilled labor. The county also is bidding farewell to large warehouse operations in quest of cheaper space.

But Mattingly said the void is being more than filled by the proliferation and expansion of electronic, biotechnology and computer firms that employ engineers and scientists hooked on the Orange County life style.

Mattingly said that during the first quarter of 1988, Orange County absorbed 3.5 million square feet of new industrial space, including new leases and purchases, thus keeping up the record pace set in 1987. Also, development of new industrial space continues to be brisk, with 2.6 million square feet under construction. Demand for manufacturing space is so great in the county, he said, that the average sales price has increased 10% to $71.29 per square foot in the first three months of 1988.

Of all the manufacturing buildings sold or leased in the county during the first quarter of 1988, Mattingly said, almost 80% were smaller than 30,000 square feet. He said this reflects the bountiful number of small firms in the county with developing technologies that have not yet become high-volume manufacturers.

It seems there are still plenty of companies willing to pay Orange County land prices--which can be two to four times the price of comparable land in Riverside and San Bernardino counties--either to keep their existing work forces or to be close to suppliers or customers.

Mike Hagan, president of Laguna Niguel-based Fluorocarbon, said his company operates manufacturing plants in various parts of the country. The Orange County operations, he said, serve the local aerospace and electronics industries and tend to manufacture products requiring exceptionally sophisticated engineering.

Although worsening traffic conditions in Orange County have made it more difficult for Fluorocarbon's workers to get to their jobs, Hagan said he will stay in the area as long as his customers do. "Whether we go or not depends on whether our customers go," he declared.

Companies that choose to stay in Orange County, however, must adjust to housing and labor conditions.

AST Research, for example, recently decided to move its computer-manufacturing operation from Irvine to Fountain Valley to be closer to where most of its workers live. A company spokesman said AST decided against moving outside Orange County because the county has a high concentration of computer companies and therefore an abundance of trained workers.

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