January 3, 2006 at 5:44 AM #6340powaysellerParticipant
Yesterday my realtor told me that San Diego’s economy would remain robust in the event of a decline in housing prices, since we have a diversified economy. I have heard this so many times before, that I decided to investigate. Nothing is further from the truth. The SD economy mirrors the national economy: loss in manufacturing, and the growth is in real estate, construction, retailing, and 80% of local growth is from consumer spending. Ah, that housing ATM again. Furthermore, we lost 3000 technology jobs this year. Just as a reference, grocery jobs changed by 300 this year, from 21,900 to 22,200. Every job category had small changes like this, so the 3000 job loss in technology is huge.
Another interesting point: Natural Trades/Mining/Construction increased by 17,800 in SD Cty, but if you break it down, you see that 17,700 are in construction and of those 12,000 are in specialty trade. It’s very important to look at the breakdowns, and they are not given on the graphs. Someone else might look at that figure and think we have an increase in mfg, such as natural trades or mining, when in fact this category hides the RE activity.
Domestic migration is negative, and the 45,000 annual population increase is from births and immigration. I assume most of it is illegal immigration. So the housing need would be for illegals and young people leaving home, and they would want to spend $100K or less on a house. By no means should anyone use the 45,0000 annual population increase number to justify more luxury home construction. Furthermore, domestic migration is negative, so locals are leaving.
Qualcomm has 500 openings they cannot fill because they can’t get people to move here: housing is too expensive.
Where is the planned business investment, or new manufacturing, Where is the biotech boom? I read in the U-T that they are outsourcing to China a lot of the research now. Where is the hiring in telecommunications, software, boat building, computer equipment? Where are the new business start-ups? Where are the exports? SD Cty imports more than it exports.
When the housing market corrects over the next few years, our economy is going down with it. Start looking for a recession proof job.July 22, 2006 at 8:37 AM #29268powaysellerParticipant
Hey all, I was having some fun perusing my first posts on piggington, to see what was my state of mind when I was selling my house last December. So I am moving some of my posts up, just to see if anything has changed in the last 8 months.July 22, 2006 at 3:19 PM #29289AnonymousGuest
I have to agree to an extent. The economy in SD really isn’t as great as made out to be. Tourism is HUGE for this area so that helps bolster things a lot more than it otherwise would be.
SD is actually a poor business destination. If you were CEO of a company say in Denver and wanted to move your company here, the numbers would kill you. High worker’s comp, taxes, utilities, real estate, gas, etc. add up to a huge impact to the bottom line.
I worked for a small company that hired a consultant to look into a move to a less expensive area. Bottom line, we could have had about $200k more profit per month in a place like Las Vegas compared to here.
Most companies are here because their owners/investors live in La Jolla or RSF, like it, and want to be close by the business, NOT because this is a good business location economically. Making just business decisions we would all be in Dallas, TX!July 22, 2006 at 5:54 PM #29298AnonymousGuest
“Tourism is HUGE…..”. Yep, I’ll bet it is. But the maids who clean hotel rooms, the front desk clerks who schedule your wakeup call and the waitress at the restaurant certainly can’t buy all those houses. I think it was in the LA Times article that Rich was quoted in that a San Diego real estate agent said something to the effect that San Diego was gonna be juuuuuust fiiiiiiiine. Tourism was the chief industry and as long as the sun shines, San Diego will just keep chuggin’ right along!
Yeah, yeah, sure! Hope that real estate agent is buying up property like crazy!
PeteJuly 22, 2006 at 6:30 PM #29300PerryChaseParticipant
Sanyo whose USA headquarters is in South Bay is moving to guess where? Dallas Texas.July 22, 2006 at 8:24 PM #29305masayakoParticipant
I agree, SD is not such a great boom economy as many people expect.
1. First off -> “Qualcomm”. Though there are 500 jobs in the web, but are they really hiring 500 people?? I doubt it. I know for a fact that, by law, whenever a company has an opening, HR need to post the job openly to the public (Equal opportunity reasons).
A lot of times, the job is really intended for internal transfer or H1 visa holders (cheap SW engineers from India/China). They post the job in the web for 1 or 2 months, and they hardly interview anyone to fill those positions. Once, they fulfill the government’s requirement, they simply hire some H1 folks from another country and claim that they couldn’t find any good candidates; in fact, they simply want somebody cheap.
2. Telecom is simply not as HOT as several years back. True, Qualcomm is #1 in CDMA mobile technology. But, you know what, CDMA is representing less than 20% of the whole pie. The rest (80%) of the market is using GSM or WCDMA. Qualcomm is not the dominant power in GSM/WCDMA. As the CDMA is shrinking, QCOM profit is going to be hurt big time.
3. “Nokia and Qualcomm are in San Diego. The economy MUST BE GOOD in SD!!!”
– Not true. Nokia is ramping down their CDMA business unit in SD. I ‘expect’, 750-1000 people are going to be layoff. In fact, from my source, the big news is going to be announce on 8/8/06.
Also, remember the Sanyo-Nokia mobile phone business merger deal? It did not go through. It’s in the news too. The whole thing just fall apart. When Qualcomm is working too hard to force other competitors out of CDMA competition (ie Nokia) by pricing, IPR rights and monopolizing the chipset business. Nobody wins. Everyone switch to alternative technology (ie GSM/WCDMA) to avoid the bully.
SD loses the business and workforces are moving out.
4. “Motorola is hiring”
– Well, Motorola is always hiring, true. BUT they also frequently laying people off. They hire a bunch of people working for them to rush for big projects. When the project is done, “SEE YA”.
5. Rumors have that a ‘huge’ government contracting deal didn’t go through. I won’t mention company name as this is just rumor and I’m working to get more info on this. Hundreds of people could possibly be affected.
Talk about job loss in the near future. 🙂
With the housing bubble burst and job loss, from my estimation, “50% drop is pretty much IN DA BAG” for the next 7-10 years. What do you think, Mr Watts? How ’bout them apples?
By the end of this 2006, we will all see a MUCH clear picture of the local SD economy. Mark my word.
masayakoJuly 22, 2006 at 10:52 PM #29313barnaby33Participant
Its not that San Diego is such a great cost of doing business locale. Its that they(companies) can find qualified people here. Thats much harder to do in Dallas. Gateway moved here simply because they couldn’t attract ANY top talent in South Dakota.
JoshJuly 22, 2006 at 11:29 PM #29317equalizerParticipant
What happended to Gateway? Ted had a house on Mt. Soledad, so thats really why they moved to UTC. Too expensice, so they moved to Poway. Then, things didnt work out and they were bought out by Emachines and move to Orange county.July 22, 2006 at 11:33 PM #29319VCJIMParticipant
You mean Gateway isn’t Gateway anymore?July 22, 2006 at 11:40 PM #29322CardiffBaseballParticipant
5. Rumors have that a 'huge' government contracting deal didn't go through. I won't mention company name as this is just rumor and I'm working to get more info on this. Hundreds of people could possibly be affected.
Does it sound like Ess-A-Aye-See?
Also a big project down the 5 from Lockheed Martin.July 23, 2006 at 2:43 AM #29327masayakoParticipant
Does it sound like Ess-A-Aye-See?
Also a big project down the 5 from Lockheed Martin.
My answer is “Nooo….”July 23, 2006 at 1:07 PM #29352carlislematthewParticipant
When the housing market corrects over the next few years, our economy is going down with it.
Surely, if the housing market corrects as significantly as some imagine it will (including myself) then Qualcomm will have no trouble hiring those 500 people because housing won’t be expensive any more!
You can’t have it both ways. Either housing stays expensive and people stay away, or housing goes down and people start to arrive in sunny San Diego to fill the open positions.July 23, 2006 at 1:16 PM #29353speakerParticipant
and don’t forget about Neurocrine. When Indiplon was stalled by the FDA their stock tanked more than 50%. Then Pfizer dumped them as a partner and now Neurocrine is left with very little. Neurocrine hired a whole new salesforce (>100) to push Indiplon and now they are all out of work. Indiplon was going to be their revenue stream to fund internal research projects. Now Neurocrine is left with the choice of sinking all of their money into re-developing Indiplon or financing early stage research. They can’t sell Indiplon because the only buyer (Pfizer) walked away. Whatever the case may be Neurocrine is a long way off from revenue and profitability.
There are bound to be layoffs…..
“End of line.”July 23, 2006 at 1:20 PM #29354VCJIMParticipant
I think you’re correct, but it takes time for sentiments to shift…it’s what happens in the interim that becomes the interesting thing to watch. Housing prices stayed relatively level through the mid-late 1990s in LA, because the general sentiment was real estate was a bad investiment after all the losses from the late 80s-1993. So even though pricing may again become affordable if things play out like most of us expect, it will still take time for people to come back in significant numbers.
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