Solano EDC breakfast highlights post-pandemic challengesApril 30 2022
PUBLISHED: April 29, 2022 at 7:20 p.m. | UPDATED: April 29, 2022 at 7:20 p.m.
Economic challenges might be looming as a corner is turned on the COVID-19 pandemic, and Solano County should pay attention to those challenges, especially amid a large period of growth.
That was the gist of messages delivered by economic experts at Solano Economic Development Corporation’s annual breakfast Friday at Fairfield’s Hilton Garden Inn. It was the first such breakfast hosted by Solano EDC since before the pandemic, a fact that was noted by most of the speakers.
“It is wonderful to see everyone in full size, as opposed to little boxes on screens,” Celia Esposito-Noy, chair of the Solano EDC Board of Directors, said, referring to a luncheon last year that was held on a virtual platform called Revo.
The event brought more than 100 elected and city officials, business leaders and representatives of nonprofits together in one room to learn about the county’s economic challenges and opportunities.
It was also a showcase for Solano EDC’s new director, Chris Rico, who was hired in January after previously serving as the director of innovation for the Los Angeles County Economic Development Corporation.
Rico said he is often asked why he left LA for Solano, and he emphasized that the people he encountered during his interviews were “incredibly kind and friendly and real” as well as family-oriented.
“LA has its great aspects, but it’s also kind of known as a sunny place for shady people,” he said.
Rico grew up in Ohio and said that when he drove around the county, he was amazed by the beauty of it.
“I think that there is so much possibility here, and you can feel it,” he said. “I feel it everywhere we go, and I think coming out of COVID, people are ready to go again.”
Rico said Solano is unique because all seven of its cities are distinct and have different festivals to draw people in.
Additionally, Rico talked about Moving Solano Forward 3, the third installment of a grant-financed multi-phase initiative aimed at identifying economic development strategies in the county. He said the consultant team has conducted 40 to 50 of the 150 interviews during the process so far.
“I want to thank the EDA (Economic Development Administration), and I want to thank the seven cities for funding this,” he said.
The first featured speaker was Bob Hess, the vice chair of global strategy for Newmark, a commercial real estate advisory firm whose clients include Google, Microsoft, Samsung, Disney and Nike. His goal was to give Solano a playbook to thrive economically.
“It’s an exciting time to be in the economy, and Solano County to come together to compete,” he said.
Hess said he was impressed with “the bones of Solano County” in terms of being able to compete in the regional economy. He pointed out that the economic development algorithm was changing, including more jobs in robotics and automation.
“I find it exciting to dive into things,” he said. “It might be messy, but you come out clean, focused and you go out there and you make it happen…One thing that I’ve seen here so far in four days: this is a can-do county, not a can’t do county.”
Among the bits of advice Hess imparted that were from his company’s playbook: business retention must be stellar, fitting in with a community and feeling wanted is important for businesses, the public sector can work with the private sector, and talent is vital.
Hess said Samsung developed a program to bring in students with one- or two-year certificates for training.
“That’s the engine of the future: Taking people at that level and bringing them out of high school,” he said. “Can you start apprenticeship programs in junior high? They do in Germany, why can’t you do it in Solano County?”
For economic development to succeed, Hess said communities should have unique and tailored businesses that highlight a community’s assets, ensure sites are development ready or can handle nay portfolio dynamics that come their way and alignment between pillars of the regional community must be strong.
The next speaker was Dr. Robert Eyler, president of Economic Forensics and Analytics, Inc., a professor of economics at Sonoma State University and “the de facto economist of this county,” according to Rico.
Eyler said the hot-button economic issue of the day was inflation. Over the last 14 years since the onset of the Great Recession, he said inflation has been very slow and controlled, including a slow recovery path coming out of the Recession. At the start of the pandemic, he said there was an initial price downturn.
“Once we started coming out of our houses and we had some financial issues, you can now see that spike,” he said.
As of February, Eyler said there was a 5.4% change in the Consumer Price Index. He advised people start paying attention to if prices are stabilizing or falling, how far the Federal reserve will act in increasing financial interest rates, if wages continue to increase and how much higher housing prices will get.
As for whether a recession is likely within the next few years, Eyler said this is dependent on how communities shape the outcomes through policy and how labor and business investment markets react to policy changes.
Overall, Eyler said Solano’s labor market was performing better than the state average in certain industries. He said leisure and hospitality industries such as bars, restaurants, hotels and event centers did not appear to be as faring as well in terms of the total number of people working in said industry. However, he said the number of employers hiring or wanting to hire at pre-pandemic levels but had not yet found workers was still unknown.
“The whole still remains from pre-pandemic,” he said. “That’s an unfortunate conundrum we do not solve easily in data.”
Eyler said the median home price over the last two years has increased by 34.6%, and the current forecast is another 14%.
“Expect that forecast to fade with the other forecasts getting a little bit more pessimistic because the cost of credit is gonna start to rise in such a way that undermines some of those originally somewhat more optimistic forecasts,” he said.
Eyler expects housing will remain a hot topic for the remainder of the decade, and with the exacerbated cost of doing business, developers will need help.
However, Eyler did have positive news to report: While the population of California and some of Solano’s neighboring counties has decreased in recent years, the population of Solano itself has increased over the last decade. This, he said, allowed for economic opportunities in Solano, with its advantages including the presence of large and small businesses, a diverse mix of industries, educational partnerships and a workforce positioned between two major markets: Sacramento and San Francisco.
“From an economic standpoint, things are gonna get slower,” Eyler said. “Hopefully, there’s this pushing the camel through the eye of the needle by the Federal reserve over the next 12 months, and we’ll get that part done, but you’re gonna expect a little bit more rocky road given the uncertainty in the Federal Reserve and what our policymakers are going to have to solve over the next 12 months. It’s a tough go.”