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East Valley Firms Escape Most of the Pain of Recession : Economy: Two-thirds of the companies responding to a survey say they are holding their own or growing.

March 07, 1993|ANDREW LePAGE | SPECIAL TO THE TIMES

East San Gabriel Valley businesses aren't hurting as badly as most of the region's residents may have feared, an unprecedented economic survey finds.

Nearly two out of three East San Gabriel Valley businesses are holding their own or growing during California's lingering recession, and two out of three plan to hire within 18 months, the survey shows.

About 9% of the more than 1,000 firms surveyed said they plan to open facilities elsewhere. Of those, about half plan to moved their entire operation, about half are simply expanding out of town.

"We need to analyze what that two-thirds of the businesses holding their own or growing means in terms of the number of jobs and revenues they represent," said Marco Brown, executive vice president of the San Gabriel Valley Commerce and Cities Consortium, which was involved in the survey. "Generally, though, I think it's darn good news if two-thirds of the businesses say they're at least holding their own" during this economic downturn.

The $170,000 survey, spearheaded by Mt. San Antonio College in Walnut, began in November. Fourteen cities and businesses co-sponsored the study and helped pay the bill.

About 54% of the 1,230 firms surveyed classified themselves as small businesses within their industry. Thirty-two percent are medium-sized and 14% are large. The survey did not define what was meant by small, medium or large.

The six-page surveys were mailed or hand-delivered to each of the 22,000 identified businesses in the East San Gabriel Valley. The response rate of 5% makes the study "statistically valid," project members said.

Called the 1993 Economic Advancement Survey Project, the study--8,700 pages in all--details the financial well-being, attitudes, and growth or relocation plans of respondents.

Service and retail businesses dominate the economy, making up almost 60% of the companies, the survey found, while construction and manufacturing accounted for about 15%.

Nearly 80% of the businesses responding are owned by males, and about 83% are owned by whites. Of the remainder, 8.7% are owned by Asians, 6.4% by Latinos and 1.5% by blacks, the survey found.

Though detailed data was not available, project leaders said professional services such as those in the accounting, engineering and health fields are doing well, while construction and manufacturing are suffering the most.

A little more than a third of the respondents said they believe that the business climate would improve slightly over the next five years, while 22% said it would get substantially better. However, one in four businesses predicts a worsening economic climate during that period.

Despite recent attention paid to government regulation and worker compensation costs as the major obstacles to business in the state, the company owners most cited "current economic conditions" as their biggest problem. Nearly as many mentioned worker compensation costs; government regulation and crime were distant followers.

Asked what kinds of skills they would be looking for when hiring employees over the next five years, the business owners predicted strong demand for management personnel, computer-proficient data entry technicians, hospital personnel, service-oriented salespeople, protective service professionals, and secretarial and supervisorial positions. Mt. San Antonio College officials say they will use that information to help structure their curriculum.

Local, county and state economic development officials say the area's job base is largely protected by the diversity of industry types. The San Gabriel Valley, they say, has been spared the mass exodus and failure of firms in other regions of the state.

"So far I think the most significant news is that all over the eastern valley, businesses are doing better than most people would have thought," said Diamond Bar City Manager Terrence Belanger, who is a member of the committee that oversaw the survey.

Jack Kyser, chief economist at Economic Development Corp. of Los Angeles County Inc., agreed: "The San Gabriel Valley has more bread and butter industries that aren't focused on any one activity."

"It doesn't have quite the exposure to aerospace as do some of the other areas like South Bay and San Fernando Valley. In both those (areas) I would expect to see a much larger percentage of businesses in a decline mode than in the San Gabriel Valley."

However, he and other economic development officials said they know of no similar studies elsewhere, so comparative data is not available.

"The only thing we have to compare our data to is newspaper headlines," said Esteban Soriano, president of The Resource Group, the Riverside-based consulting firm that was hired to conduct the survey.

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