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Lessons from Lockheed learned: City prepares
for future pitfalls
Published 5/12/98
By Jason Z. Cohen
Daily Bulletin
Ontario is on a roll.
It’s growing, business is booming and even critics are singing its praises.
But as history demonstrates, for every economic high point, there’s often
an equal and opposite low spot.
Now that the economy is strong, Ontario leaders know they must prepare for
that inevitable time when the nation’s economic health declines.
“Anybody can operate in a good time,” former Ontario Mayor Bob Ellingwood
said. It’s making it through the tough times that is such a challenge.
To do so, a city must have a healthy reserve and plan ahead.
“In Ontario, we’re very fortunate because we’ve got multiple sectors in
our economy,” said City Manager Gregory Devereaux. “The more major elements
you have, the more likely you’re going to reduce the overall impact because
the economy doesn’t impact all of those in the same way at the same time.”
If a recession hits, its effect on Ontario Mills and Allegiance Healthcare
will be different from the impact on Mark Christopher Chevrolet and office
supplies firm Quill Corp.
Ontario has weathered recent recessions well, local economist John Husing
said.
Although the recessions of the early 1980s and the early 1990s caused a drop
in real estate activity, neither devastated Ontario’s economy.
“Ontario in the most recent recession very late in it the city lost
Lockheed. That was a direct effect of the aerospace recession,” Husing said.
There is no way a city can completely insulate itself from the economy at
large, especially in today’s global marketplace.
“At the city level there is very little you can do,” Husing said. “In a
sense, it’s ‘happening’ for Ontario right in this moment. What’s
developing in the city’s economy is a very diverse employment base. Because
the city right now is the hot zone for companies that are migrating to the
Inland Empire, it is getting a diverse job base virtually delivered to it.”
Ontario also is seeing a surge in retail, hospitality and tourism. The
convention center and Mills, plus the airport expansion, contribute to this
increase, said Councilman Alan Wapner.
“If Disneyland goes broke, then Anaheim is in trouble,” Wapner said. “If
there ever is a recession again, because of Ontario’s economic base, we’ll
probably be the last into the recession and the first back out again.”
Twenty years ago, losing Lockheed would have been devastating to Ontario,
Wapner said. The loss was a major impact, but it could have been worse.
Because Ontario’s economic health relies so heavily on retail sales, the
health of the nation’s economy will be a strong factor in the city’s
well-being.
Retail and entertainment depend on disposable income, and when resources are
tight, people will cut down on their spending in these areas.
“The Mills is there. It will make more or less money depending on the state
of the economy,” Devereaux said. “The major part of the investment has been
made.”
Although Ontario’s Convention Center draws people to the city, it could be
a drain on the services people receive if the convention market goes south, said
former Mayor Howard Snider.
“If all of the sudden things dried up, and people weren’t going to
conventions because it got real bad, you’re still stuck with the bonds,”
Snider said. “It certainly could have an impact on wages and construction of
facilities. There’s only so much money that comes around.”
Predicting and recognizing changes in the economy are as important to cities
as they are to businesses, Devereaux said. Knowing when the economy is turning
means being able to take action.
“I don’t think you can ever insulate yourself totally, but you can do
some things, if you’re fortunate, that minimize or reduce the level of impact,”
Devereaux said.
“The more quickly you act to correct any kind of financial problem the less
costly it is.”
Peering into the future is important, but straining to see too far can be
counter-productive, Snider said.
“You can project a ways out, but you can’t go out 12, 15, 20 years. There’s
nobody at any level that can project that far out. Even (Federal Reserve
chairman Alan) Greenspan can only go out in little pieces,” he said.
“It’s too big a puzzle for a locale to have any kind of crystal ball that’s
reliable.” |
