SYNOPSIS
Purpose
The 1994 Business Survey was initiated by the City of Long Beach to guide and strengthen its business outreach and retention efforts. Technical guidance, data analysis, and report preparation was carried out by the Economic Roundtable. The purpose was to:
- Identify the concerns, needs and opportunities of businesses in order to strengthen City programs for supporting Long Beach’s economic base.
- Respond to the needs of individual businesses and facilitate access to City services to help firms remain viable and competitive.
- Provide information to businesses about City programs and services.
- Provide tangible evidence of the City’s concern about business retention and growth.
- Obtain information about potential lay-offs of workers and job openings which might provide employment for laid-off workers.
Response Rate
The survey was sent to 908 companies and received exceptionally strong support from long Beach businesses œ 561 firms returned it to the City for a response rate of 62%. Firms returning the survey add up to more than 10% of all businesses in Long Beach. This is a high level of representation for a survey of this sort and justifies confidence in information developed through this project.
Length of Time in Business
The average length of time firms responding to the survey have been in business in Long Beach is 23 years. The median length of time is 18 years. Firms which began business in Long Beach after 1980 are much more likely than firms beginning before 1980 to say they would still choose Long Beach if they were making that decision again today. Part of the explanation for this is that a larger share of older firms are in industry sectors that are now declining in Long Beach.
Long Beach as a Good Location for Business
Two closely related questions on the survey asked firms for their bottom-line assessment about whether they perceive Long Beach to be a positive location for business, and whether they would select Long Beach if they were choosing a location for their business today. Businesses rating Long Beach favorably indicate types of industries the City might attract, while businesses giving unfavorable ratings indicate areas where attention may be needed.
Overall, 54% of firms say they perceive Long Beach as a positive location for business, and 52% say they would select Long Beach as the location for their business if they were making this decision today. These ratings are closely linked to each other, and rise and fall together depending on industry sector, area of the City, size, and profitability of the firm.
Long Beach is rated most favorably by firms: in the Finance, Insurance and Real Estate industry sector, with 50 or more employees, in the East area of the City, and that have experienced sales growth over the past three years. It is rated least favorably by firms: in the Durable Manufacturing sector, with 1 to 9 employees, and in the North area of the City.
Business Conditions
The main body of the survey mailed to firms asked questions about business conditions. Answers to these questions show areas of business strength and opportunity in Long Beach, as well as raise warning flags about areas in which businesses are vulnerable or declining. A summary of responses to these questions is shown below.
Evidence of Business Strength
- During the next 1 to 3 years Company expects to expand:
- a. employment 49%
- b. sales 71%
- c. building 22%
- d. equipment 36%
- e. product line 40%
- Company has experienced increasing sales during the
past 3 years 43% - Company perceives Long Beach to be a positive location
for business 54%
The past three years have been a time of regional recession and severe decline in aerospace, but 43% of firms report increased sales during this period. The greatest growth in sales was in the Transportation, Communication, Utilities, and Finance, Insurance, Real Estate sectors. The least growth in sales was in the Construction and Retail Trade sectors. More firms in the South-West Central (downtown) area reported growth in sales than any other area of the City. And sales growth was most frequent in firms with 50-99 employees and least frequent in firms with 1-9 employees.
Evidence of Business Problems or Uncertainty
- Company has experienced decreasing sales during
the past 3 years 47% - Company perceives its industry to be in recession or
general downturn 51% - Major customers or suppliers have closed or relocated
during past 3 years 49% - Company has site/facility outside Long Beach offering
same product/service 35% - Company has had recent change in ownership or change
is pending 9% - Company is considering plans to relocate from Long Beach 16%
- Company has union agreement with contract expiration date 10%
- There are physical barriers to expansion at current site 32%
- Regulatory pressures are affecting business operations 40%
- Company is experiencing difficulty obtaining financing 16%
- Problems with security and safety have increased
in the last three years 50% - Company leases current site 53%
- Company is undecided about renewing lease upon
expiration 27% - Company has difficulty recruiting qualified employees 28%
- Company finds it necessary to provide its own training
for new employees 60% - Company has laid-off employees in the past year 24%
- Company will lay-off employees in the coming year 6%
The most prevalent indications of business problems or uncertainties are that: 47% of firms report sales decreased during the past three years, 51% of firms perceive their industry to be in recession, 49% of firms say major customers or suppliers have closed or relocated during the past three years, and 50% of firms report problems with security and safety have increased in the last three years. The fact that nearly half the firms report major customers or suppliers have closed or relocated in the past three years suggests a significant restructuring of the City’s economy is underway and many firms are losing business linkages which have sustained them.
Business Environment
The survey contained three open-ended questions that requested firms to assess the City’s business environment in their own words:
- Please list two major strengths of doing business in Long Beach.
- Please list two major weaknesses of doing business in Long Beach.
- Is there anything Long Beach could do differently to improve the well-being of your business?
Strengths of Long Beach’s Business Environment
Long Beach’s location and transportation infrastructure account for a majority of strengths in the business environment identified by companies. Four factors account for 57% of all strengths identified by businesses:
- Central Location 23%
- Access to Large Customer Base 15%
- Port Facilities 12% Freeways 7% Subtotal of Four Major Strengths 57%
Firms see Long Beach as a central location which allows businesses to take optimal advantage of the transportation infrastructure to move goods and meet with customers.
Weaknesses of Long Beach’s Business Environment
In contrast to a short and tangible list of Long Beach’s strengths, many of the weaknesses firms see in the business environment have to do with less tangible human behavior that has anti-social or counter-productive impacts on the City. The five most prominent areas of concern identified by companies include crime, lack of City responsiveness and support for business, blight, planning and permitting difficulties, and under-utilization of the Long Beach Airport. These issues account for nearly half the concerns identified by businesses:
- Public Safety 29%
- City Responsiveness to/Support for Business 7%
- Blight and Deterioration 5%
- Long Beach Airport 4%
- Planning and Building Permits 3% Subtotal of Five Major Concerns 48%
Business managers are anxious about actual as well as potential crimes against their property, employees, and themselves. Respondents also express dissatisfaction with support from City Hall, inefficiencies in the planning and permitting process, and under-utilization of the airport. Many respondents qualified these criticisms of the City by noting that in the past year there has been marked improvement in the attention and results they have gotten from City officials.
Recommendations for Improvement
The five most important things companies say Long Beach could do to improve their well-being are to increase public safety, be responsive and supportive to business, transform blighted and deteriorated areas into clean, convenient public spaces, recruit new businesses, and revitalize the airport. The percentage of businesses making each recommendation is shown below:
- Public Safety 18%
- Responsiveness to and Support for Business 13%
- Blight and Deterioration/Clean Public Spaces 7%
- Recruit New Businesses 7%
- Long Beach Airport 4% Subtotal of Five Major Recommendations 49%
Findings From On-Site Interviews
On-site business outreach interviews were conducted with 234 firms. The purpose of these interviews was to explore issues raised by firms in the mail survey, explain City services that might be of interest to the firm, and arrange appropriate follow-up contacts with other City staff. Eight areas of business assistance were each of interest to more than ten percent of the firms visited:
- Information about Obtaining Enterprize/Revitalization Zone Benefits
- Assistance in Obtaining Long-Term Financing
- Help in Dealing with a Public Safety or Law Enforcement Issue
- Assistance from Long Beach Business Consulting Service
- City Assistance in Dealing with Traffic Problems
- Help in Finding Additional Space Within the City
- Help in Resolving Building Permit, Building Code or Fire Marshall issue
- City Help in Planning Expansion of Facility
Conclusions
- Long Beach is experiencing large-scale changes in its industry structure. Half of the companies say that major customers or suppliers have closed or relocated. Many companies that have been in the City longest are in declining industries and unhappy with the business environment. Only slightly more than half of businesses say they see Long Beach as a positive location and would select Long Beach today.
- Many new businesses are finding Long Beach a desirable business location. These firms appear to be creating new jobs at twice the rate that established firms are losing jobs. Unfortunately, firms that close down or leave the City tilt the job balance toward a net loss. It is important that the City retain as many mature firms as possible so as to maintain job stability and growth in Long Beach.
- The business outreach program is improving how firms see the City. Many firms considering leaving Long Beach have asked the City for help with specific problems. A significant share of these firms have higher than average sales growth, and if the City effectively responds to their needs they may be encouraged to stay.
- Concerns about the business environment are felt most strongly in the North planning area, which includes Bixby Knolls, and in Durable Manufacturing, which includes aerospace. These are areas where business retention is most critical.
- There is evidence of competitive strength in the Transportation and Finance sectors, and in the South-West Central (downtown) and East planning areas.
