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Rough week for county's tech jobs
Local economy will feel impact of Agilent, Medtronic layoffs
Published: Saturday, April 25, 2009 at 3:00 a.m.
Last Modified: Saturday, April 25, 2009 at 10:21 p.m.
It was a bad week for high-tech workers in Sonoma County.
On Wednesday, Agilent Technologies laid off 300 employees in Santa Rosa, after announcing its sales are down 30 percent.
On Friday, Medtronic said it is cutting 240 manufacturing jobs in Santa Rosa, as it shifts production to lower-cost factories in Ireland.
More than one out of five workers at the county’s two largest technology companies lost their jobs over the three-day span. The two companies still employ about 2,000 workers in Sonoma County, but their futures are uncertain in the global economic downturn.
The loss of high-paying technology jobs is a serious blow to the economy in Sonoma County, where unemployment already approaches 10 percent.
Such jobs create demand for local goods and services, supporting restaurants, car dealers, clothing stores and a host of other businesses, said Robert Eyler, a professor at Sonoma State University and director of the school’s Center for Regional Economic Analysis.
“There is a loss of the multiplier effect of these incomes on the local economy,” he said. “Even more jobs are now at risk.”
There’s also a psychological impact.
“You start to think, ‘What about my job?’ ” Eyler said.
Some displaced workers will put their homes up for sale, adding more inventory to an already-depressed real estate market, said Steve Cochrane, an analyst at Moody’s Economy.com, which tracks Sonoma County business trends.
“It will tend to weaken the housing market,” he said.
Last week’s layoffs at the core of the county’s manufacturing sector show how far the recession has spread.
Sonoma County’s technology sector held its own in 2008 as the bottom fell out of the housing and finance sectors. But the economy’s continued slump made consumers cut spending — and forced technology makers to slash costs.
This month’s layoffs in the county’s tech sector follow earlier job cuts in retail, as stores trimmed their staffs or shut their doors.
Overall, local employers have shed 8,600 jobs over the past year, the largest number on record dating back to 1983.
That number, however, understates the true damage unleashed by the recession. A record 25,900 Sonoma County residents were unemployed and looking for work in March, almost double the number from a year ago, according to the state Employment Development Department.
The jobs at Medtronic will be hard to replace, Eyler said, because manufacturers are moving to lower-cost locations in Asia and other parts of the world.
“Sonoma County manufacturing is slowly eroding and we’re not likely to see those jobs coming back,” he said.
The average U.S. manufacturing job pays $20,000 a year more than a service sector job, according to the California Manufacturers & Technology Association, a Sacramento-based trade group.
Technology manufacturing in the U.S. has been disappearing since 2001, when the tech crash forced companies to seek lower-cost locations offshore.
The layoffs at Agilent were more broadly based, affecting management, engineering, finance, marketing, manufacturing and human resources.
Typical salaries for engineers at Agilent in Santa Rosa range from $69,000 to $89,000 a year, according to glassdoor.com, a Web site where workers post comments about their jobs.
Laid-off Agilent engineers may get rehired when the economy turns around or find work at a cluster of Sonoma County tech startups founded by former Agilent workers, Eyler said. There also may be opportunities for engineers in the emerging green tech industry, he said.
Many laid-off Agilent employees will get nine months’ pay after they leave as part of a severance package.
“The severance package is still very generous, so it takes some of the sting off,” said an Agilent worker who didn’t want to be quoted by name.
But employees are bitter that Agilent continued to buy back its own stock as the recession deepened, he said.
“A lot of people I talked to are very upset that the company spent billions on stock buy-backs instead of investing in projects and process improvements during the downturn,” he said.
The technology sector has been through recession before and will rebound from this one, according to Cochrane.
“When the economy is back on its feet, there will be a lot of demand for tech goods and services,” he said. “It will be a leading industry coming out of the recession. There will be a need to improve, refresh and upgrade to new technology.”
Cost-cutting and job losses will continue for the rest of the year, but the economy should improve in 2010, Cochrane said.
“If the economic recovery goes at the pace we foresee, we should reach some point of stability next year,” he said. The economy could start to grow later in 2010, Cochrane said.
“We have to wait until businesses reach that psychological point where they’re ready to start spending again,” he said.
You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.
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