The Future of the 101

At the Southern California Development Forum seminar, Mark Schniepp, Senior Economist for the Controller's Office and Director of the California Economic Forecast Project, told the audience of over 150 that the 101 Corridor region will be generally unaffected by the recent dot-com shakeout.

"The 101 Corridor has a terrific mix of biotech/pharmaceutical, internet, semiconductor, telecom and instrument/electronics firms which has helped to insulate it from the trauma experienced by other technology clusters."

Despite the region's unquestionable strength, other economists disagreed with Schniepp on the degree to which the area will be impervious from the economic downturn experienced by all technology sectors.

"I agree with the statement that the 101 Corridor will not experience the dot com shakeout. Ventura County has a well-diversified technology sector, with many different industries. The growth by the high tech sector isn't led by dot coms," said Ross DeVol, Director of Regional and Demographic Studies at the Milken Institute. "But I would disagree to some extent with the computer and electronic component industries being insulated. My analysis has shown that those two sectors are more susceptible to an overall recession in the US then they've ever been. In that sector there is increased sensitivity that people who concentrate on Ventura haven't fully integrated into their thinking. Ventura County does have a diversified base, which will survive better than most metros around the country."

Schniepp also stated that reports of significant economic weakness have been "exaggerated," especially in Ventura County and California. "Only 11 states are in contraction and the rest of the nation, especially states on the East and West Coasts, is thriving," said Schniepp. "While the Consumer Confidence Index has slipped from its highs, it is still at 1997 levels, nowhere near a recessionary level."

"The 101 Corridor seems to be working on advanced items. They have a real market as opposed to dot coms who were bright ideas looking for a market," said Los Angeles Economic Development Corporation's (LAEDC) Chief Economist Jack Kyser. "But there will be turbulence. They're not going to be immune completely given the turbulence going on for all tech areas in California. Everybody in tech is going to experience some bad time during this year."

"The reason that Ventura hasn't felt the impact is that there aren't many dot coms to begin with," said larta's COO Victor Hwang. "If the entire national tech sector goes through a downturn it's doubtful that any region can isolate itself completely. Ventura County is part of the national economy. As for the lack of layoffs, there have been layoffs by Cisco and Lucent and there will inevitably be layoffs throughout the food chain."

"Because of the kinds of sectors that the 101 has become competent in, we have to be careful in suggesting it is immune to a slowdown," said Rohit Shukla, the CEO of larta. "Those sectors are the ones most closely associated with the business cycle. I think it is a mistake to look at these tech areas as individual silos and that they're not connected. I would suggest that we may see something of a slowdown occur. However, the base being built in the 101 Corridor represents a solid and diverse one."

Despite economic challenges imposed by the tech industry, Schniepp stood by his comments during a phone interview with larta, saying that aside from the Santa Monica dot com and e-commerce based companies, "hemorrhaging is not in Southern California."

by Wendy Hall

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