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Daily Business Report — March 19, 2010

Business Owners Expect No Changes in Expenditures, Staffing

But They Are More Optimistic About Economic Recovery

The majority of San Diego County business owners who were queried intend to keep capital expenditures and staffing levels the same as last year, according to Union Bank’s 10 annual Small Business Survey. But the survey also revealed that last year’s high level of pessimism has given way to a more positive outlook, with 51 percent of San Diego business owners anticipating economic recovery during the second half of this year and into next year.

Significant Boost in Optimism

Optimism based on the prospects for profitability is up significantly in San Diego County. Fifty-six percent of business owners expect 2010 to be a more profitable year, the survey found. This reflects more optimism than the state as a whole (51 percent) and a major shift from 2009, when only 36 percent expected profits to increase—an eight-year low.

The 2010 survey, based on interviews conducted in January, is the largest in the past decade, with 2,541 participants statewide.

Despite the higher level of optimism in San Diego, 64 percent of business owners intend to keep capital expenditures the same as last year, and 69 percent anticipate maintaining the same staffing levels.

“We’ve been through the deepest recession since the 1930s, so it’s not surprising that small business owners are in a holding pattern,” said Executive Vice President Joseph Benoit, head of Union Bank’s Business Banking group. “Most entrepreneurs believe the worst is over, but they’re still taking a very conservative position because of the slow pace of the recovery. They’re not confident enough to shift into a growth mode yet.”

The survey data show that nearly one out of four business owners (26 percent) had to lay off employees for financial reasons in 2009. This is the highest level of layoffs since the survey began tracking staffing reductions in 2002. Business owners reporting layoffs hit a low of seven percent in 2005 and 2006, but the number increased to 10 percent in 2007 and 20 percent in 2008.

Nearly half of small business owners (48 percent) reported lower sales in 2009 compared to 2008, the largest percentage since 2001. Fifty-six percent cut their operating costs last year, and 30 percent reduced their debt to protect their company from turmoil in the financial system.

“Given all these difficulties, it’s encouraging to see that 95 percent of small business owners do not anticipate layoffs in 2010,” said Senior Vice President Christy Schmitt, head of Union Bank’s Retail Small Business Banking.

Biggest Challenges

The top challenge identified in running a business in California—the state’s economy—remained the same as last year, and this result accurately reflects much weaker economic data for California than the rest of the nation, according to Union Bank’s Director of Economic Research, Senior Vice President Kei Matsuda. For example, California lost six percent of its payroll employment in 2009 while the nation lost only 4.3 percent.

According to the survey results, the state’s economy is the No. 1 concern for 54 percent of San Diego business owners. Fifty-six percent feel the state’s budget crisis had a moderate or significant impact on their business in 2009.

As concern about the national economy dropped from 30 percent last year to 24 percent this year, state and local business taxes emerged as the second biggest challenge to doing business in California. This is the top challenge for 39 percent of business owners, up from 28 percent last year.

The third biggest challenge continues to be workers’ compensation costs (34 percent). Most business owners (62 percent) said their workers’ compensation insurance premiums remained the same in 2009 as the previous year. However, 27 percent reported a rise in their premiums, a slight increase from last year. On average, premiums increased 15 percent.

As in last year’s survey, business owners want the Obama Administration to provide relief by cutting taxes on small businesses, creating tax incentives to encourage job creation and lowering health care costs.

“Small business owners are still hoping for relief from both the state and federal government to reduce costs that are outside their control,” said Aida Alvarez, the former head of the Small Business Administration during the Clinton Administration and a member of Union Bank’s board of directors. “Those who have survived the recession by reducing spending remain cautious as they wait to see what happens this year in Sacramento and Washington.”

Gubernatorial Appointments

Steve Alexander, 58, of La Jolla, has been appointed to the State Athletic Commission. Since 2000, he has served as president of the Steve Alexander Group, a public affairs company. Previously, Alexander was a regional director for Burson-Marsteller from 1997 to 2000, vice president of Stoorza, Ziegaus and Metzger from 1995 to 1997 and president of Westwind Real Estate Services from 1984 to 1989. He is a member of the International Association of Facilitators and International Association of Public Participation. The position requires Senate confirmation and the compensation is $100 per diem. Alexander is a Democrat.

Janice Cone, 67, of San Diego, has been appointed to the Board of Behavioral Sciences. She has served as a therapist for A Helping Hand Clinic since 2002. Previously, Cone was a program reviewer for the Marriage Family Therapy Program at Chapman University in 2008. Prior to that, she worked for Alliant International University as Irvine site director of Marital and Family Programs from 2004 to 2008 and associate professor for the department of psychology and family studies from 1989 to 2004. Cone was faculty at West Virginia University’s School of Medicine Psychiatry Department and taught as an adjunct instructor for the School of Social Work from 1970 to 1988. She is supervisor of the American Association of Marriage and Family Therapists. Cone is a member of the National Association of Social Workers and the Academy of Certified Social Workers. The position requires Senate confirmation and the compensation is $100 per diem. Cone is a Democrat.

Deane Manning, 58, of Fallbrook, has been appointed to the Speech-Language Pathology and Audiology and Hearing Dispensers Board. He has owned Superior Hearing Aid Service since 1997. Previously, Manning was general manager of Destination Hotels from 1994 to 1996 and general manager and director of golf operations for JC Resorts from 1986 to 1994. He is a member of the International Hearing Society, Menifee Medical Center Foundation Board and Mt. San Jacinto College Foundation Board. The position does not require Senate confirmation and the compensation is $100 per diem. Manning is a Republican.

Plaza Research Corp. Signs $1.3 Million Lease in UTC

Plaza Research Corp. has signed a $1.3 million, seven-year lease for 6,538 square feet of office space in the Genesee Executive Plaza at 9339 Genesee Ave., Suite 100, in San Diego. Genesee Executive Plaza, a 159,000-square-foot office project in the UTC area, was acquired by Janez Properties in 2008. The project is nearly 90 percent leased and includes additional tenant such as FedEx, IGO Medical Group and First Pacific Bank. The lessee was represented by Brian Ffrench of Studley. The lessor, PCCP Janez Genesee, was represented by Eric A. Northbrook and Christopher High of Cushman & Wakefield. Plaza Research is a network of focus group facilities with 13 offices nationwide.

Janez Properties has completed more than $1.2 million in property capital improvements and upgraded the energy management systems. It modernized four elevators, added new signage throughout the two-level parking garage, improved handicap (ADA) access, repainted all exterior metal window mullions and railings and renovated the second floor common areas.

Assembly Members Get Assignments

Assemblyman Marty Block, former president of the San Diego Community College District board of trustees, was appointed the new chair of the Assembly Higher Education Committee on Thursday. Assemblywoman Lori Saldaña was appointed as the Assembly’s Assistant Whip. Saldaña is on legislative leave from her post in the community college district’s Continuing Education Program. The appointments were made by Assembly Speaker John A. Pérez.

LEAD San Diego Names Director of Marketing, Communications

John M. Miller has been named to the new position of director of marketing and communications for LEAD San Diego, a community leadership organization. Prior to his appointment, Miller handled marketing and communications for two San Diego nonprofit organizations — Second Chance and the Coalition of Neighborhood Councils. Prior to his nonprofit career, Miller was a regional marketing manager for Clear Channel Entertainment (now Live Nation) in New York.

Sara Wacker Heads Newly-Reconstituted PRSA Chapter

Sara Wacker, vice president of c3 Communications, has taken the helm as president of the newly formed San Diego/Imperial Counties chapter of the Public Relations Society of America. The board elected a new executive committee to lead the chapter, including Wacker; President-Elect April Bolduc of Sempra Energy; Treasurer Anne Stephany of Loews Hotels; Secretary Arika Andersen Daniels of Scatena Daniels Communications; and Immediate Past-President Chris Wahl of Southwest Strategies.  Each member of the executive team will serve a one-year term.  The board has elected seven new members, each of whom serve a three-year term: Kim Edwards of UCSD Health Sciences; Dan Flores of the Art Institute of California – San Diego; Bill Gay of Imperial Valley College and Reliance Public Relations; Blake Nelson of Southwest Strategies; Julie Smith-Taylor of Taylor PR Inc.; Carrie Shields of Bailey Gardiner; and Kristie Spalding of YMCA of San Diego County.

The chapter’s four PRSA assembly delegates are Gayle Lynn Falkenthal, of Falcon Valley Group; Bey-Ling Sha of San Diego State University; Mary E. Schmidt-Krebs of MESA Integrated Marketing Inc.; and Smith-Taylor.Ddirectors-at-large are Erin Coller of Zenzi Communications; Reema Makani of San Diego Medical Services; and Tricia Whittemore of Porter Novelli, along with Edwards, Flores, Gay, Nelson, Shields and Spalding. Rene Carmichael continues her role as chapter manager, and Marisa Valbona of CIM Incorporated will serve as PRSA San Diego’s ethics officer.

Business Datebook

March 19

PANEL ON HOMELESSNESS: Family Health Centers of San Diego  brings together San Diego political, government and business leaders for a discussion on ways to reduce homelessness Downtown. The Spirit of the Bario presentation, “New Paradigms for Reducing Homelessness in Downtown San Diego in 2010,” is from 11:45 a.m. to 1 p.m. at the Logan Heights Family Health Center, 1809 National Ave., San Diego. Panelists: Kevin Faulconer, president pro tem of the San Diego City Council, the moderator; Fred Maas, chair of the Centre City Development Corp.; Brian Maienschein, commissioner of United Way of San Diego County’s Plan to End Chronic Homelessness; Joel Roberts, CEO of PATH Partners; and Rob Lankford, past chair of the Downtown San Diego Partnership. Admission is $25. To reserve online, visit fhcsd.org/donations.cfm or e-mail barbaraf@fhcsd.org.

March 23

LUNCHEON: Asian Business Association holds its March Rice Club Luncheon with guest speaker Ron Roberts, member of the county Board of Supervisors. noon to 1:30 p.m., San Diego Hall of Champions, Balboa park. Cost is $25 for ABA members, $30 for nonmembers, $35 at the door. To reserve, visit abasd.org.

March 24

EMPLOYMENT LAW: Brown Law Group will present an update on 2010 employment law, including latest court decisions, legislative amendments and proposed bills employers must be aware of to properly manage their businesses. 7:45 to 9 a.m., University Club, 750 B St., Downtown San Diego. To reserve space, e-mail Valeina: jack@brownlawgroup.com. Or call (619) 330-1700.

The Daily Business Report is produced by REP Publishing Inc., publisher of San Diego Metropolitan Magazine, the North Park News, Kensington News and the West Coast Craftsman. (619) 906-4104.

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We Want Your Opinions on San Diego’s Big Issues In the coming months, Probosky Research (one of California’s leading opinion research firms) will continue its partnership with SD METRO to survey San Diego residents about topics of interest to our readers. We’d like to throw open the door for suggestions for topics. What do you want to know? What do you think you know, but aren’t sure? What are you certain you know, but want to prove it beyond doubt? Ideally, we’d like to see questions that have to do with public policy.

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