Silicon Valley companies skeptical of Obama's job plan

January 29, 2010 7:12:08 PM PST
President Barack Obama visited a machine shop outside Baltimore to promote a plan to stimulate job hiring, but if he spent the day in Silicon Valley instead, he might learn some of his ideas may not work.

The top executive at SolFocus, a solar technology start-up in Mountain View, says the president's plan to offer $5,000 in tax breaks if a company hires a new employee won't help.

SolFocus President & CEO Mark Crowley tells ABC7 News that he needs capital to take his company to the next stage -- manufacturing and deployment of large-scale, highly efficient commercial solar arrays.

However, small businesses have complained that banks have not been making loans.

"Any initial tax incentive, whether it's to hire or other aspects of the business, is not going to measurably affect our business for two or three years into the future. Whereas, the capital infusion is the way to create the opportunity to create the jobs that will bring the advancement in the economics that we like," Crowley said.

Obama has also proposed channeling $33 billion to community banks to encourage small business lending. That, in turn, would pave the way for more hiring. The $33 billion would come from rescue funds that Wall Street banks are repaying the government during the financial crisis.

Crowley has 70 employees at its Mountain View headquarters, plus 30 in Mesa, Arizona and 20 in a sales office in Spain. That number could double in the next two years if there's capital to expand.

The co-owner of a local restaurant, Sonoma Chicken Coop, welcomes the concept of a tax incentive to hire, but he can't afford to add anyone this year.

"Right now, we're really watching every employee and the hours they work and trying to send them home early and cut the payroll as much as we can," Sonoma Chicken Coop Jeff Starbeck said.

Starbeck looked around his expansive restaurant in the historic section of downtown Campbell and said he has no plans to hire in the next 12 months. He pointed out the economy has been hard on the restaurant sector, and he's still at the stage of sending employees home early when business is slow to save money.

Pat Dando, president & CEO of the San Jose Silicon Valley Chamber of Commerce, would like to see 1,000 to 3,500 jobs created in the region in the coming year. However, that is a modest gain, she noted, considering that the valley has lost an estimated 50,000 to 100,000 jobs during the recession. Some of the companies that trimmed staff are no longer in business or have left the area, so it will be challenge to make up the loss.

Ms. Dando does worry that a short-term tax break may not have long-term impact because companies still may not have confidence to bring on new employees without knowing if the economy will experience sustained improvement. "No one wants to hire someone this year, then have to do layoffs next year," she said.