CALIFORNIA'S CENTRAL VALLEY
Central California
Builds on Logistics Base
Builds on Logistics Base
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| Target Corporation opened a 1.7 million sq.-ft. (157,930 sq.-m.) distribution center last year in Shafter, about 20 miles north of Bakersfield. The new facility is within four hours of 35 million consumers. |
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Affordable land and housing, big issues in California, continue to fuel growth in the state's Central Valley. This will continue for years to come, according to the Great Valley Center (CVC), a foundation/think tank that supports efforts to improve life in the Valley. The CVC predicts 85 percent of the state's growth will occur in this region over the
next decade.
Abbas Grammy, an economist at the University of California, Bakersfield, says the valley region has been insulated to a large degree from national economic woes. He says the area's economic structure is vastly different from the rest of the state's and most of the nation's.
"There's been a great movement of population and business to this area," Grammy says of the valley. "Of course, we suffer from the state budget crisis, which is affecting public agencies and institutions."
While the crisis of a couple of years ago is now a bad memory, energy issues continue to have negative and positive effects on the region's economy, Grammy believes. High energy costs obviously affect production costs of the region's farmers, but they also pad government coffers in Kern County, home to considerable oil production and refining activity.
"On the positive side, the county collects property taxes from oil companies whose valuations depend on the price of oil. So when the price goes up, the county collects more taxes and these companies also have more capability for expansion and employment," Grammy says.
Work force preparation and poor air quality are among challenges facing the region, according to Grammy.
"Kern County is one of the most polluted counties in the nation," he says, an assertion backed by the American Lung Association's "State of the Air 2004" report. As for the workers, "We need to work very hard to improve the education and qualifications of the labor force," he adds.
Grammy says the double-digit unemployment rates in every county in the region are somewhat misleading due to the seasonal nature of agricultural work.
"At first glance it seems to give the impression we are a very depressed area, but that's the nature of agriculture here. We always have people waiting between seasons and workers being displaced by machines."
Joseph Hurd, senior economist with the UCLA Anderson Forecast, shares Grammy's assessment that Central California is economically unique. He says its diverse labor pool and lack of dependence on the technology sector have helped.
"It's an interesting area," Hurd says. "California's recession, which started in December 2000, was very regional. Sacramento did not have a single year of downturn, so basically they didn't have a recession. Most of the valley did not have a downturn. It still has a large amount of agricultural production and that's doing well."
Hurd says the Central Valley and the San Diego area fared the best during the recession. Among the valley's strengths is affordable housing. Also, the weak dollar has the region's agricultural exports looking stronger. However, he notes that higher diesel prices for truckers may curtail the sector a bit.
"It wouldn't surprise me to see more business formations there," Hurd says. "Overall it's going strong -- not as strong as the late 1990s, but it's doing pretty well."
next decade.
Abbas Grammy, an economist at the University of California, Bakersfield, says the valley region has been insulated to a large degree from national economic woes. He says the area's economic structure is vastly different from the rest of the state's and most of the nation's.
"There's been a great movement of population and business to this area," Grammy says of the valley. "Of course, we suffer from the state budget crisis, which is affecting public agencies and institutions."
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| Agriculture and oil production dominate Kern County's economy. |
While the crisis of a couple of years ago is now a bad memory, energy issues continue to have negative and positive effects on the region's economy, Grammy believes. High energy costs obviously affect production costs of the region's farmers, but they also pad government coffers in Kern County, home to considerable oil production and refining activity.
"On the positive side, the county collects property taxes from oil companies whose valuations depend on the price of oil. So when the price goes up, the county collects more taxes and these companies also have more capability for expansion and employment," Grammy says.
Work force preparation and poor air quality are among challenges facing the region, according to Grammy.
"Kern County is one of the most polluted counties in the nation," he says, an assertion backed by the American Lung Association's "State of the Air 2004" report. As for the workers, "We need to work very hard to improve the education and qualifications of the labor force," he adds.
Grammy says the double-digit unemployment rates in every county in the region are somewhat misleading due to the seasonal nature of agricultural work.
"At first glance it seems to give the impression we are a very depressed area, but that's the nature of agriculture here. We always have people waiting between seasons and workers being displaced by machines."
Joseph Hurd, senior economist with the UCLA Anderson Forecast, shares Grammy's assessment that Central California is economically unique. He says its diverse labor pool and lack of dependence on the technology sector have helped.
"It's an interesting area," Hurd says. "California's recession, which started in December 2000, was very regional. Sacramento did not have a single year of downturn, so basically they didn't have a recession. Most of the valley did not have a downturn. It still has a large amount of agricultural production and that's doing well."
Hurd says the Central Valley and the San Diego area fared the best during the recession. Among the valley's strengths is affordable housing. Also, the weak dollar has the region's agricultural exports looking stronger. However, he notes that higher diesel prices for truckers may curtail the sector a bit.
"It wouldn't surprise me to see more business formations there," Hurd says. "Overall it's going strong -- not as strong as the late 1990s, but it's doing pretty well."
