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AST Layoffs Renew Worries Over O.C. Jobs : Employment: Announcement by computer maker that it will close Fountain Valley plant leads to call for new effort to keep businesses in county.

October 17, 1994|DEBORA VRANA | TIMES STAFF WRITER

FOUNTAIN VALLEY — AST Research Inc.'s announcement that it will shut down its manufacturing operation here is bringing renewed calls by business and political leaders for a concerted effort to keep companies and jobs in Orange County.

Battered by heavy losses, the Irvine personal computer maker said Friday it will lay off nearly 700 workers, including 440 at the Fountain Valley plant.

"AST's announcement is part of a continuing loss of high-tech manufacturing jobs here," said Anil Puri, chairman of the economic department at California State University at Fullerton. "This again brings up the question of our local business climate and our ability to retain firms."

Just two months ago, Hughes Aircraft Co. said it will shut down most of its Fullerton operations, laying off 1,000 workers and taking 6,100 more jobs out of the county. Though that move had been rumored for months, AST's news Friday caught local officials by surprise.

"We didn't know about it, and obviously this is not good," said Wayne Wedin, chairman of the Orange County Economic Development Consortium, a business retention group. "Certainly we're not pleased to lose good jobs."

While that is not an indication that Orange County is failing in its effort to attract and keep good jobs, Wedin said, it is certainly a wake-up call. "We've got to work harder. We're going to have to redouble our efforts."

The consortium has had a number of successes, Wedin said, citing Taco Bell Corp.'s decision in late June to keep its corporate headquarters--and 1,000 jobs--in Irvine.

An exhaustive two-year review by the fast-food company of opportunities in other states, including Texas and Georgia, prompted government and business leaders to assemble into an emergency "red team" to keep Taco Bell and its valued jobs here.

Since 1989, however, Orange County has lost 148 companies that employed a total of 19,342 workers, according to data compiled by the Orange County Chamber of Commerce and Industry. "Any time we lose jobs like this, it is a blow to what has been a turnaround in Orange County," said Fred Mickelson, chairman of the chamber.

Puri noted that, though the positions to be eliminated at AST will be only a small percentage of the estimated 65,000 high-tech employees in Orange County, the loss cannot be ignored. "In terms of percentages it's not a lot, but AST is an important company, a local, home-grown company, and when they make a decision like that, we need to pay attention," he said.

Mickelson said he had been in the dark about AST's plans.

"You can't win them all, but that doesn't mean we can't do something about it and try to figure why this happened," he said. "This gives us another arrow in our quiver to say to local officials the importance of continuing to focus on this."

Mickelson said the AST situation points out the need for a full-time, professionally run business retention effort in the county.

Ernie Schneider, Orange County administrative officer, said there is support for a new business retention group that would combine efforts of the chamber, the consortium and other groups.

"We're in the process of putting together something right now," he said. "But I have a feeling there's not much we could've done here. It's hard to compete with Taiwan," where AST will consolidate manufacturing of its notebook computer.

Fountain Valley's mayor said the layoffs could have a ripple effect on local businesses that depend on AST's employee base.

"My real concern is that there are 400 employees that will not be shopping in Fountain Valley, and the resulting loss in sales tax revenues," Mayor John Collins said.

But he and other local officials conceded that there was not much they could have done to keep the AST jobs.

"We're not in the technology business," Collins said. "These people have fallen behind with their product and satisfying their customers. These people need to get on the technological power curve."

Some local businesses that deal with AST, however, had an early warning.

On Oct. 10, "AST told us they didn't need any more fasteners for the desktop model," said Mike Ratzlaff, 33, general manager of Irvine-based All-Spec Fasteners Inc. "We found out on Wednesday that they didn't want any more for the other model."

AST generates about 30% of All-Spec Fastener's revenue, so "the closing will put a dent into our business," Ratzlaff said. "But, surprisingly, we're starting to get a lot more business from the smaller companies out there, so we won't be knocked down entirely."

Ratzlaff acknowledged, though, that the recent string of high-tech plant closings is troubling, and he raised concerns about the broader effect on the region's economy. "There are just so many big companies closing that it has to have an impact," he said, "even with the smaller companies growing."

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Times staff writer Greg Johnson contributed to this report.

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