Bay Area CEOs predict major layoffs

August 15, 2008 6:52:55 PM PDT
The prospect of more job layoffs is growing, reflected in a new survey by the Bay Area Council, a group of CEO's. The council's view of the regional economy is the worst in five years.

We're already coping with high food and gas prices, and a housing slump. Now comes a new prediction that 26 percent of Bay Area companies are planning layoffs in the next six months.

"I know a lot of people that are out of work and that are having a hard time finding a job," says Emily Baratta, a San Francisco worker.

Finding a new job could get even tougher. The Bay Area Council's survey projects every Bay Area county to lose jobs in the next six months, except one, Santa Clara. Thirty-five percent of the poll takers expect job growth, while 23 percent forecast losses. Technology remains one of the few bright spots in the regional economy.

"The Bay Area is stuck right now in a tug of war between the domestic economy on one side and the international economy on the other. They're really sort of headquartered in Silicon Valley -- the international economy -- and in the East Bay for the domestic. Right now, it looks like the domestic is winning that tug of war," says John Grubb, a spokesman for the Bay Area Council.

At the start of the year, an equal number of CEO's were forecasting hiring and layoffs. Two months ago, in a burst of optimism, hiring was forecast to outpace layoffs by two percent, but the trend has suddenly reversed with 26 percent of CEO's expecting layoffs in the next six months.

Brian Garrett is president and CEO of Community Bank of the Bay, which is headquartered in Oakland. He remembers many workers left the state 20 years ago to find jobs during a similar slump. This time, he says, job seekers don't have anywhere to go.

"The states that were recipients, booming, Nevada, Arizona, Idaho are all in the same boat. They have bigger problems than we do," says Garrett.

What do top executives think of the regional economy?

A whopping 72 percent of the CEO's say economic conditions in the Bay Area are worse than six months ago. Twenty-three percent say they're the same, while five percent believe conditions are better. Negative sentiment measured only 10 percent early last year, soaring to 72 percent today, creating a significant shift.

And how long will it take for a turnaround?

25 percent said one year, 20 percent predict nine months, and 17 percent think it will take a year and a half to turn around.

"Turnaround, a turnaround means an uptick. I don't see that certainly, flat maybe. Not an uptick in the next 12 months," says Garrett.

The good news is job seekers should target small companies -- those with 50 or fewer employees. Those companies indicated they will be hiring.


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