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Southland's Job Engine Expected to Cool Down

The Inland Empire will post gains, but at a slower rate, a forecast says. The housing market remains hot.

May 01, 2003|Marla Dickerson | Times Staff Writer

The Inland Empire, Southern California's job growth engine, is expected to lead the region in employment again this year, though in a lower gear than during the boom of the '90s.

Riverside and San Bernardino counties are projected to create 27,600 jobs, according to a study issued Wednesday by economist John Husing. A 2.6% increase would be downright robust compared with the state and the nation, which are struggling to generate employment at half that rate.

Still, it would represent the stingiest job creation for the Inland Empire since 1996 -- falling well short of the 40,000 new positions needed to meet the rapid population growth. And it would mean that many of the tens of thousands of people drawn east every year by relatively cheap housing would continue to jam freeways on their way to work in Los Angeles and Orange counties.

Weighing on the inland labor market are the nation's sluggish economy, a manufacturing slump, the state budget crisis and soaring business costs.

"I just don't see what's going to propel it faster," said Husing, an independent economist who has been tracking the region's economy for decades. "Until those things shift, I don't see a major uptick."

Some companies say there are stirrings of stronger growth ahead.

Corona Clipper Co.'s business pretty much mirrors the pattern of the Inland Empire's economy. The manufacturer of gardening and farming tools had explosive growth in the 1990s.

In the last two years, said purchasing manager Mike Clewell, business has been flat because of the combined effects of the anemic national economy and unusually bad weather.

More recently, he has seen things picking up. With the housing market holding strong and the economy poised to improve, Clewell said, Corona Clipper is projecting sales to expand 5% to 10% this year.

And he's figuring the company will add 15 to 20 employees in the next 12 months, boosting its total to 220. "It's definitely getting better," he said.

The Inland Empire long has been a magnet for blue-collar industries because of its abundant land and lower business costs in comparison with such urban centers as Los Angeles.

The area has seen its factories slammed by the same forces affecting manufacturing nationwide. After gaining an average of 9,000 factory and warehousing jobs annually between 1994 and 2000, the region lost 4,900, or 2.7%, of these jobs last year.

That, however, was mild compared with the 6% decline in these employment categories statewide. Even during the deep downturn of the early 1990s, Husing noted, the Inland Empire managed to eke out job gains in those sectors.

Now, he said, California's energy crisis, surging workers' compensation costs and other business expenses are beginning to sap the region's cost advantages and push firms to look elsewhere to expand.

"I'm very nervous about our ability to compete," Husing said. "Company after company has told me the same thing."

Husing said California's budget mess also is putting a lid on the Inland Empire's job gains. As the region has grown, so has employment in public schools, police departments and other government jobs needed to serve its burgeoning population. But he and other economists say the state's fiscal mess will greatly restrain public-sector jobs over the next few years.

In contrast, the region's real estate sector continues to shine as home buyers priced out of surrounding counties head to Riverside and San Bernardino for affordable housing.

Last year, nearly 44% of the new single-family homes purchased in Southern California were in the Inland Empire, one of the few remaining places in the Southland with ample developable land.

With median home prices still under $200,000, the area remains a relative bargain compared with the Southland average of around $280,000. Even developers of upscale homes are finding a hot market for their products.

Jim Previti, chairman and chief executive of Empire Companies in Ontario, said demand was brisk for the 125 homes he's developing in the Inland Empire, which range in price from $350,000 to $700,000.

"We're setting records every quarter," Previti said. "We're as bullish on this area as we can be."

Indeed, many say the Inland Empire's demographics will continue to make it the hot ticket.

Jack Brown, chairman of Colton-based Stater Bros., said his supermarket chain is building two stores in Corona and one in Moreno Valley. He said 92 of the chain's 156 stores are in the Inland Empire.

"All those young families are great for our business," he said.

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