STEVE SINOVIC, NEWS-PRESS STAFF WRITER
Published October 21, 2011 On the day following the announcement of a major company layoff in the region, the fog rolling in from the Pacific was an apt metaphor for some of the audience members at a global economic outlook summit at Fess Parker's Doubletree Resort. One bright spot amid the gray on Thursday: proceeds from tickets sold for the event -- which included an impromptu wine auction featuring spirited bidding -- benefited the family of Navy Seal Louis Langlais, a Santa Barbara native recently killed in action, leaving a wife and two young sons. About $10,000 was raised for the Langlais family. The Bank of Santa Barbara and the Santa Barbara Region Chamber of Commence cosponsored the event. Those hopeful for positive news on the jobs front were reminded that Thousand Oaks-based Amgen Inc. on Wednesday announced that it was laying off about 380 U.S. and British employees in research and development, nearly 6 percent of its R&D staff, as it restructures those operations. Approximately 200-plus of these mostly well-paid employees live in Santa Barbara and Ventura counties, said keynote speaker Sung Won Sohn, professor of economics at California State University Channel Islands. The region can ill afford the job loss, the South Korean-born Dr. Sohn said. "We can no longer say we (the South Coast) are that insulated" from the forces impacting the national and global economies, he said, referring to the world's largest biotech company by revenue. Amgen stated the layoffs are targeted to enable the company to better allocate its research and development resources. Clearly, Amgen is competing with burgeoning biotech research and development throughout the Pacific Rim, an indicator of another area where American knowhow no longer reigns supreme. For a lot of high-tech and pharmaceutical companies, "Asia increasingly is where the action is" for partnering, said Dr. Sohn, who also is the director of the college's Institute for Global Economic Research. China, in particular, is the "locomotive pulling the world economy ahead," said Mr. Sohn, encouraging local companies to think of ways to get on board. The goal of IGER is to connect local businesses to Pacific Rim countries though conferences, trade missions and training seminars. "We are trying to be a bridge to the Pacific Rim" to help you export, Dr. Sohn told about 150 business people at a breakfast summit focused on the global economy's impact on regional business.
In terms of opportunities realized overseas, Dr. Sohn mentioned the success of Limoniera, a regional farm producer which now sends 30 percent of its avocados and lemons to customers in China. Using charts, graphs and slides, both speakers illustrated their forecasts for the international, U.S. and Santa Barbara County economies. Asia accounts for a growing share of global economic growth, approaching 40 percent. "I can assure you that will be going up," Dr. Sohn added. Countries like China need to import more meat, pork and poultry, he said. "They want to eat better," and will consume a larger percentage of the future wines and strawberries we produce here on the South Coast, Dr. Sohn said. But doing business there is not for the faint of heart, he cautioned. "There are a lot of government regulations, which are unfairly enforced," said Dr. Sohn. "American firms will have to put up with that" if they want to do business there. Elsewhere around the world, Dr. Sohn believes the EU is in danger of breaking up, an event that has repercussions for a world economy that is more linked than a decade ago. Quite possibly, countries like Greece, Portugal and Spain will have to drop out, he suggested. "British, French and German banks don't want to keep restructuring" Greek debt, Dr. Sohn said. If Europe has a TARP program, that could mean that these banks will end up taking "a significant haircut," which could impact U.S. financial markets. "A month ago, a lot of people were worried about the possibility of a double-dip recession," said Dr. Sohn. "The latest news from the Federal Reserve shows we're not headed down this path but we are still expanding at a very slow pace," he said of the U.S. economy that has been rattled by financial markets, high energy costs and supply disruptions to the auto industry from Japan. Joining Dr. Sohn at the summit was Gary Zimmerman, a senior economist from the Federal Reserve Bank of San Francisco. "This recession was twice as long and deeper" than the previous four downturns, said Mr. Zimmerman, speaking of the slow pace of recovery, which has been characterized by high unemployment and low inflation. Mr. Zimmerman's outlook called for national unemployment to stay above 7.5 percent through the end of 2012. "That actually looks relatively good compared to where we are today (9.1 percent), but compared to what most of us have seen in our lifetimes, that's not very good at all." If discouraged workers who have given up or are underemployed are added, the reality is closer to 16 percent nationwide. In California, it's about one in every four or five people, said Mr. Zimmerman, who also addressed the spectre of inflation. "When I look at an economy that has 5-6 percent of industrial capacity sitting dormant, I'm not seeing a lot of signs that tell me I should worry about inflation," said Mr. Zimmerman. "It's looking like we've got a U-shaped recovery," said Mr. Zimmerman -- one that hugs the bottom before heading back up.
A major reason is the tenaciousness of the housing bust. "Typically, housing is one of the first sectors to recover," Mr. Zimmerman said. "But this time there's a housing overhang." email: firstname.lastname@example.org