A First Taste of Good Life in Inland Empire

Like many who ventured east for affordable housing, Jesus Martinez of Moreno Valley paid the price with a horrendous commute. Four to five hours a day he languished in his pickup, traveling 140 miles to and from his machining job in Huntington Park. When the weekends came around, he lay numb inside his spacious, four-bedroom house, too tuckered out to even light up the backyard barbecue.

But that was before Smart Truck Systems arrived in town about a year ago, bringing with it 60 jobs, one of which Martinez snatched. Today, the 39-year-old father of three wakes up at 6, not 4, takes a leisurely breakfast, then drives four miles to Smart’s factory, where he earns $14.50 an hour as a supervisor. Home by 3:45 in the afternoon, Martinez helps his teen-age daughter with her homework. “I enjoy life now,” he says.

Others in this infamous boom-and-bust edge city still hold faraway jobs in Los Angeles and Orange counties, including Martinez’s relatives. But over the last few years, more and more people there and throughout Riverside and San Bernardino counties have found work closer to home as the Inland Empire has quietly added tens of thousands of jobs, growing at a faster rate than all other areas in the state except for Silicon Valley.

Since 1990, nonfarm employment in the Inland Empire has grown by 130,000 jobs--about as much as the total for Orange and San Diego counties, which took bigger hits during the recent recession.

With the jobs has come a measure of community life previously unseen in parts of the Inland Empire. The jobs also have helped stem the tide of foreclosures, and as housing prices have finally firmed, builders of new homes have returned to the region in anticipation of the next boom, which is expected to boost the region’s population to 3.8 million in 2005, from 3.1 million currently.

“We’re making a tremendous investment in the Inland Empire,” says Randall Lewis of Ontario-based Lewis Homes, which recently curtailed its work in the Las Vegas area and shifted those resources to Southern California, notably Riverside and San Bernardino counties.

State’s Hottest Building Market

The Inland Empire led all regions in the state last year in residential building permits. Lewis and many others are betting that as housing prices in Los Angeles and Orange counties heat up, young families with dreams of home ownership will once again stream into the Inland Empire.

No one doubts that will happen, but what worries some is whether the area will be able to absorb another onslaught of residents without creating a new legion of unhappy commuters and, worse, setting itself up for a disastrous fall when the next economic downturn occurs.

The last recession hit the Inland Empire especially hard, wreaking havoc on home prices and crushing the spirits of many of the million people who settled in the region in the ‘80s. It wasn’t that the region’s economy collapsed, although construction did; overall, the area actually added jobs every year in the ‘90s. But countless households imploded when layoffs swept aerospace and other industries largely in Los Angeles and Orange counties, and with little household wealth, negative equity in their houses and relatively few home-grown jobs to support them, many found themselves stranded.

“The history of the area is boom and bust,” says economist David Friedman. “When the place booms, it goes through spasms of industrial development. . . . But it crashes faster during bad times.”

John Husing, a longtime Inland Empire economist, doesn’t see the cycle repeating itself. The area’s economy is far more diverse today than in the ‘80s, he says, and the region isn’t as dependent on commuter jobs as before.

During the 1980s, the Inland Empire didn’t create anywhere near the jobs needed by the new residents pouring into the region, and employment then was fueled by a build-up in residential construction and warehousing. But as the Inland Empire emerged from Southern California’s 1991-93 recession, job growth has not only accelerated but is coming in higher-paying industries such as manufacturing, health care services and the region’s modest high-technology sector.

Moreover, job growth is now keeping pace with new arrivals, and as such, officials claim the area is evolving into more than just a bedroom community. The 1990 census had found that more than 235,000 Inland Empire residents commuted to neighboring counties, but more recent surveys by the Southern California Assn. of Governments and cities such as Moreno Valley suggest that the figure has dropped slightly.

“We’re starting to experience a reverse commute; more workers are coming here,” says Norm King, executive director of the San Bernardino Associated Governments, the transportation authority for San Bernardino County. “When you reduce commuter travel times, people spend more time with their families, and there are significant environmental effects.”

But growth in the Inland Empire, comprised of Riverside and San Bernardino counties, has been uneven, raising concerns about a widening economic chasm in a region, that overall, lags the rest of Southern California in household income and educational attainment.

Most of the new jobs, housing starts and commercial development in the region have formed on the western side of Interstate 15, close to the Los Angeles and Orange county lines, in Ontario, Corona, Chino and newer cities such as Rancho Cucamonga or in Temecula, farther south along the San Diego County line.

Big-box distribution facilities have sprouted next to fast-disappearing farmlands along I-15. One of the newest of these, Toyota’s Parts Center, is the size of 17 football fields and contains supplies once stored at five Toyota facilities in Japan. But even that center is dwarfed by the Ontario Mills mall, a 2-million-square-foot playground and shopping center that in its first full year in 1997 attracted more visitors than Disneyland.

Ontario, the region’s juggernaut city, also boasts an expanded airport and a new convention center along with 800 new hotel rooms. The city has become a major transportation and distribution hub, and to keep its growth going, officials are seeking to annex 8,200 acres of land south of the city.

Less visible are the scores of small manufacturers--in furniture, plastics and other basic industries--that have settled in industrial parks throughout Riverside and San Bernardino counties.

Many of these companies relocated to the Inland Empire from Los Angeles and Orange counties, as Smart Truck did from Pomona, to take advantage of the region’s lower-cost labor, vast stretches of relatively cheap land and a favorable business climate.

“We got the dirt and the space, and companies are responding to the competitive advantage,” says Husing.

Orange County Lumber, a longtime business in Santa Ana, left Orange County for the Inland Empire about three years ago because it needed to expand. After considering Fullerton and Anaheim, among other places, it picked a 15-acre site in Rialto.

“It was a third of the price of Fullerton and Anaheim,” said Rick Hormuth, the firm’s president. “The city of Rialto was very supportive. They helped us get the operations set up without making us jump through the normal hoops.”

Hormuth hasn’t changed the company’s name. Nor has he moved; his commute now stretches 120 miles back and forth from his home in Tustin. But employees Tracy and Susan Page of Lake Forest followed the company east, settling in Rancho Cucamonga.

The Pages, both in their early 40s, with three children, bought a comfortable 3-bedroom, 2 1/2-bath house for $147,000. The previous owner had paid $230,000 for the home eight years ago, Susan Page said. “Before I moved here, I thought the Inland Empire would be the farthest place I’d go to,” said Page, who has lived most of her life in Orange County. But now she raves about the parks, the schools, her down-to-earth neighbors. “I love it here. Now I’m never going to leave Rancho Cucamonga.”

Since 1994, Husing has counted 417 firms, mostly manufacturers, that have moved into or expanded in Riverside and San Bernardino counties. A quarter of these migrated from Los Angeles and Orange counties. Husing thinks the Inland Empire today is like the San Fernando Valley in the 1950s and Orange County in the ‘70s, when they emerged as the Southland’s economic hot spots.

“It’s our turn,” he says.

Corona Leads Population Surge

Apart from Ontario, Corona may be the region’s hottest economy. Situated at the mouth of Santa Ana Canyon, the city has benefited richly from the migration of both residents and businesses from dynamic Orange County, about five miles to the west.

Since 1990, Corona has added more people than any other Inland Empire community, growing to more than 100,000 people, many of them young families drawn by housing prices that, on the average, are $80,000 less than those in Orange County. Last year, builders pulled almost 2,000 permits for homes, up from just 142 in 1991. And dozens of businesses have followed, taking advantage of lower-cost land, labor and taxes. Corona ranks as among the cheapest places to do business in the state, according to Los Angeles-based consultant Kosmont & Associates.

“It’s a very business-friendly environment,” says Allen Chao, chief executive of Watson Pharmaceuticals, one of Corona’s biggest companies with 600 employees. Chao himself lives in Orange County, saying Corona still lacks hotels, restaurants and cultural activities. But for his business, which is undergoing a major expansion in town, he says: “Orange County is too expensive . . . Corona is centrally located. We can get excellent skilled and semi-skilled labor.”

Unemployment in Corona is a little over 5%, compared with 6.2% for all the Inland Empire. Retail sales have grown by double digits in the last couple of years, and half the city’s households now report annual income of more than $53,000--compared to the Inland Empire’s overall median household income of $36,000.

As companies like Watson have expanded, the city’s job base has grown from 34,000 in 1991 to about 45,000 today, says Jim Bradley, Corona’s economic development director. “When people are making their money here, they’re spending their money here,” he says, adding that the city is building two parks and an entertainment complex, anchored by a music museum dedicated to Fender Guitar, one of the city’s largest employers.

Cities farther east have had less to cheer about. Unemployment in places such as Colton, Hemet and Indio still hover near 10%. And higher levels of crime, urban decay and a poor image continue to hurt the Inland Empire’s two largest and established cities, San Bernardino and Riverside.

Still, the economies in those cities have improved measurably since the early 1990s. The historic Mission Inn landmark has reopened, symbolizing Riverside’s revived downtown streets, which are luring back merchants and visitors. And behind growing companies such as Optivus Technology, a 5-year-old firm that makes equipment for cancer-fighting proton therapy, San Bernardino’s jobless rate has fallen from 14% in 1993 to a little over 8% today.

“They’re cleaning things up around here,” says Garner Holt, owner of Garner Holt Productions, a special-effects business based in San Bernardino since 1977. Last fall, Holt considered leaving the area to expand, but instead moved to a newly developed part of town. “We just bought a building out here in a beautiful industrial park,” he says. “It’s like an industrial park out in Irvine.”

Trend Could Spread East

Officials in San Bernardino and other cities are counting on growth in Ontario and Corona to spread eastward, a trend that will be pushed as land and labor constraints emerge in cities closer to Los Angeles and Orange counties.

“If you’re looking to the future, I think we’re talking about this area,” says Mark Bazdarich, an economist and consultant specializing in the Inland Empire. “It has an excellent transportation grid, it’s ideally situated to service Los Angeles, San Diego and Orange counties. There’s lower cost and room to grow out there.”

That was what brought Thor Industries, a maker of recreational vehicles, to Moreno Valley in early 1996. City officials helped Thor convert an old, abandoned facility into a manufacturing plant. The company started with 100 employees but has since grown to 370. Steve DeMarco, Thor’s national sales manager, says the company is planning to add 100 production workers, who earn between $7 and $15 an hour.

With companies such as Thor moving into Moreno Valley and the opening of a $200-million hospital in town, directors of child-care facilities say more parents are dropping off their children later in the morning because they don’t commute to faraway jobs, and they’re picking them up earlier.

“Right now, people feel good,” says Gary Baugh, personnel director for the city of Moreno Valley. “Crime is down, graffiti is down, houses on your block are being sold and unemployment is down.”

Baugh, 54, moved to Moreno Valley in 1985, the year the city incorporated, and he marveled as the population exploded from about 57,000 to more than 130,000 by the early 1990s. When the recession took hold, Baugh watched his neighbors and church members disappear, one family at a time, and the incidence of bankruptcies, crime and graffiti shoot up. But in the last couple of years, he says, the population has stabilized at about 135,000, and Moreno Valley saw its first increase in new-home permits last year after several years of decline.

“We just opened up a ballpark, and 500 people came to the dedication,” Baugh says, adding that a local Boy Scout troop recently raised $2,500 to buy a new drum for a high school in town. “That’s a good sign that people are here for a long time, that there’s a community.”

The challenge for the Inland Empire as a whole is to be more than just a low-cost alternative to Phoenix and Las Vegas. Officials of the two counties, which joined forces a few years ago, know that they must develop not only a more self-contained economy but a more well-rounded one as well.

In California’s knowledge-based economy, the Inland Empire still has a paltry share of high-tech jobs. Just 1.6% of its total employment is in high-tech sectors such as biotechnology, telecommunications and computer software, compared with 6.7% for Orange County and 4% for Los Angeles, according to Regional Financial Associates.

“What we need are more higher-paying jobs,” says Robert Klemme, president of Entrepreneurial Capital Corp., a venture capital firm in Riverside. A year ago, Klemme and other executives and educators in the Inland Empire formed CORE 21, a group dedicated to developing commercial applications of technology and research at Loma Linda Medical Center, UC Riverside and other universities in the region.

“We have a lot of jobs in distribution, and I’m not taking anything away from them, but a lot of them are $8- to $9-an-hour jobs,” Klemme says. “What we’d like to see are $18- to $20-an-hour jobs.”

The Inland Empire does have a higher share of distribution and warehousing employment. While some of those pay better wages than people think--workers at Toyota’s Parts Center earn $13 to $17 an hour--distribution jobs, like construction, not only tend to pay less than high-end service and technology jobs, but are especially vulnerable during downturns.

“The future of the Inland Empire is going to be determined by whether it can attract some major sources of jobs that have higher than average incomes,” says Jack Brown, chairman of Stater Bros. in Colton. Stater has 81 supermarkets in the Inland Empire, more than any other chain, and is looking to open stores near Temecula and in the Palm Springs area. With 8,000 employees in the two counties, Stater is the largest private employer in the Inland Empire.

Brown is optimistic, but he is aware that healthy urban areas generally have a manufacturing or service industry as the lead employer rather than a retailer like Stater Bros. “I would rather be the fourth-largest private employer than be No. 1,” he says.