A woman in black slacks, high heels, and a billowy top cinched at the waist briskly walked out of a Santa Maria temporary employment agency. She looked up only long enough to push open the door and breeze through it. Then she dropped her head once again and brushed imaginary crumbs—or possibly wrinkles—from her blouse, avoiding eye contact with the man walking inside.
They are two of thousands of people looking for work in Santa Maria, where competition is tough, the foreclosure rate is high, the industry is small, and retail sales are at an all-time low.
The city’s not alone, though. The situation echoes that of the rest of the country.
It’s no mystery how the economy got this way. Like most states in the country, California’s current economic status was spurred by the rise and fall of the housing market, followed by trouble in the banking sector, which set off tighter lending standards, which affected the amount of money small businesses could borrow. All that resulted in belt tightening by small businesses and subsequent layoffs and workforce reductions, which in turn resulted in the closing of the middle class American checkbook and low retail sales.
So now what?
In Santa Maria, the Economic Development Commission works along with the city and the Chamber of Commerce to look after the city’s best interest in terms of business development and jobs. That task has become tougher now that local businesses have faced losses and the need to streamline and layoff workers.
Bob Hatch, CEO of the Economic Development Commission, said the comments from business owners in the area indicate this is an all-time low point.
“Santa Maria has been hit hard,” he said. “What we hear from businesses is that things are just terrible. They are really, really bad. Retail sales are down. They are at the lowest retail sales for a prolonged period as far back as we can find.”
Hatch said small businesses, the mom-and-pop shops, have been hit the hardest, partly because credit for small businesses is hard to come by and partly because people just aren’t buying.
“People say, ‘Let’s not buy a new car. Let’s make this washing machine last longer,”
Hatch said.
Some industries, such as construction, have been hit hard, too.
Dave Cross of the EDC said there isn’t much of a balance in the industries that are performing well, as there has been in previous recessions.
“It used to be that there would be another sector to go to,” he explained. “When one went down, you could go to the other, and it would be doing fine.
“But now there isn’t that.”
Where the jobs are … or aren’t
Santa Maria Valley has a 14.2 percent jobless rate. To understand that number’s gravity, you really need to look at other numbers that come into play. Santa Maria’s population is roughly 100,000, 14.2 percent of which doesn’t sound too bad—until you realize the workforce only consists of about 40,000 people, according to Hatch. The Workforce Investment Board of Santa Barbara County’s executive director, Raymond McDonald, gave a more specific answer: There are currently about 35,200 people working in Santa Maria, and 5,800 people who could work, don’t currently have jobs, but are looking for employment, he said.
The 60,000 or so other people not working in Santa Maria are children, retired, unemployed, or off the charts for various reasons.
So the number of unemployed is roughly 5,800 people in the city of Santa Maria alone. But even that figure is a little misleading, according to Hatch: “That’s not counting the people who’ve dropped off the rolls. We’re talking about people that once had good jobs and can’t find another one. Sure, they keep their eyes peeled for opportunities, but their unemployment benefits have run out and they’ve given up.”
Santa Maria has a lower jobless rate than Lompoc (at 16 percent) and Guadalupe (15.5 percent). Vandenberg Air Force Base has a 14.5 percent unemployment rate. But Santa Maria’s number is much higher than Santa Barbara (6.5 percent), Solvang (3.5 percent), and Goleta and Carpinteria (both at 4.6 percent). Those numbers, released by the Workforce Investment Board of Santa Barbara County for July, indicated the county’s overall average estimated unemployment rate stands at 9.2 percent as of Aug. 20, with a total of 20,600 unemployed out of a workforce of 224,500 people.
Unemployed workers mean business for temporary agencies—but not just in terms of an increase in workers seeking placement. Wendi Patterson, director of marketing at United Staffing Associates, said they’ve seen an increase in businesses seeking workers as well.
“I think that it’s definitely increased more so than, say, the last two years,” she said. “I think the companies that are using us are the survivors and those that are investing in their companies.”
On the Central Coast, there’s been an uptick across the board, she said.
“There’s been an increase for winery jobs and owner/operator-type businesses that are still hanging in there and are keeping themselves busy,” she explained.
There’s also been some increase in medical, administrative personnel, and upper executive-type jobs.
“They are reaching out to our type of company in order to screen and do interviews and background work,” she said. “A lot of them are hiring directly from us or running through us before they hire them permanently—sort of like a probation period.”
As for people searching for work, Patterson said she’s not sure if there’s necessarily as much of a general influx, but the field depends more on what companies are seeking. For instance, a recent call for winery workers brought in more applicants than the company could handle.
“We were just besieged by winery workers,” she said. “Our lobbies were full. We actually had to pull ads because we had too many people.”
The up side of business
Not everyone is hurting. Some businesses have continued to thrive—and even grow—during this recession. One local example is Hardy Diagnostics. Don’t expect to pick up any tips, however. According to president Jay Hardy, the company has no killer strategy; they’re just in the right industry.
“I don’t think we’re doing anything special,” Hardy said. “We’re not geniuses; we’re in a very good industry.”
Hardy Diagnostics manufactures more than 2,800 products used for the culture and identification of bacteria and fungi, and distributes more than 12,000 microbiology and laboratory supply items.
“Like I always say, bacteria doesn’t know that there is a recession on,” Hardy said. “People still get sick.”
The company works with clients in fields that span molecular biology, pharma/biotech, cosmetics, veterinary, food and beverage, education, and even water and the environment. Having contacts in so many areas has helped create a stable client base for the company.
“We’re very diversified, so I think that’s helped us,” Hardy said. “We have over 6,000 customers, so we’re not relying on just a few customers for business. We have over 12,000 products, so if one thing fails, we have another to go to, and another.”
Hardy’s success has benefited Santa Maria in terms of jobs; the business employs 175 people, 150 of whom are in Santa Maria. And the company is continuing to grow. Last year, Hardy saw about 6 percent growth, and this year the company is anticipating the same.
“We haven’t had to lay anybody off,” Hardy said. “In fact, we’ve hired some extra people.”
Hardy is modest about his company’s success and is quick to point out other local companies doing just as well. Most of them are in the manufacturing or industrial areas.
“A lot of the manufacturers are really thriving,” he said. “On the manufacturing side, our valley is blessed with some thriving companies.”
Some companies the Sun spoke with couldn’t talk about their business growth for this article because of contract stipulations with clients or the sensitive nature of their business. But they admit that key clients, the right industry, and planning have contributed to keeping them financially sound through this recession.
But not all successful Santa Maria-based businesses are manufacturers. Business is good for Bendele Books, and they want it to stay that way, so they’re turning to an online model. Everything about the move away from a brick-and-mortar storefront has made sense for owners Joe and Becky Bendele.
Bendele Books researches curriculum and sells books to educators. The Bendeles have little need for physically stocked shelves, other than for the local deliveries they make.
Originally, they considered getting into the mall when another bookstore closed, but after running the numbers, the plan just didn’t make financial sense. In fact, 40 percent of people who come to Bendele Books are looking for something the shop doesn’t have immediately on hand, meaning they have to order it, Becky said.
“So why would you tie up capital in inventory, which isn’t moving?” she asked.
The Bendeles are currently working on a website and taking the business online, a move they hope will help to grow their business despite the economy.
Where do things go from here?
Santa Maria could benefit from more businesses like Hardy Diagnostics and Bendele Books. Hatch and Cross said they’re doing what they can to attract that sort of entrepreneurship.
Cross said Santa Maria has made moves to plan for when the economy recovers.
“The city had the foresight to annex acreage in Area 9,” he said. “The airport will have a big complex down the road, prime for new development and business to come in.”
To fill that complex, the Economic Development Commission is making efforts to stay on the radar screens of companies looking for a place to set up shop. But those efforts are hampered by businesses not having access to credit to fill the already-empty buildings in town.
And companies that are doing well are holding their cards close to the vest as they wait to see what the economy will do next.
“You’ll find business that will say we are doing well, we’re making money—but what they are not doing is spending money,” Hatch said. “When companies here have downsized, they get more efficient. When things come back, they aren’t going to hire back.”
Hatch said, however, that as dismal as things are, the EDC remains optimistic and is actively looking for signs of economic improvement. He said the glimmer of hope will come when small businesses get access to credit, which he said is the lifeblood of their business.
Another good sign would be a stable housing market.
“Foreclosures have to stop,” Hatch said. “When you see some of the ‘For Sale’ signs coming down and foreclosure rates lowering, that’s one good indicator.”
However, as Hatch indicated, that’s just one indicator. He said Wall Street used to be a good place to look for signs of the future, but it can’t be relied on anymore to determine economic recovery.
Businesses can’t wait for indicators, however. So they go on doing what they do. Some will fail, and some will succeed—but that happens in any economy.
“I believe the ones who are able to make it through this time are going to be the strongest,” Becky Bendele said. “Even though it’s tighter, there’s so much potential for growth.”
Contact Arts Editor Shelly Cone at scone@santamariasun.com.
This article appears in Sep 9-16, 2010.