Summit acknowledges virus threat but plays up economic opportunities

Mar. 12--The hand sanitizer containers on every table said what most of the speakers at Wednesday's Kern County Economic Summit seemed to avoid: Nothing presents a greater challenge to the immediate health of the local economy than the coronavirus.

On the same day the World Health Organization declared a pandemic, attendees at the 20th annual summit got a sense -- but no firm prediction -- of just how much trouble the virus may yet cause to U.S. businesses.

"Likely a recession could happen," said Harlan Thompson, managing director and senior portfolio manager at Bank of America. He was the only speaker Wednesday to substantially address the coronavirus as a growing threat to global and domestic economic growth.

Other speakers at the well-attended event focused instead on positive aspects of the local economy, from a major reconstruction project in eastern Kern to a $600 million hotel-and-casino proposed in Mettler to a tech hub under development in downtown Bakersfield.

Wednesday's optimism followed a frank assessment early on by the head of the Greater Bakersfield Chamber of Commerce, Nick Ortiz. He said the audience was "fully aware of the challenges" ahead.

His point, punctuated by a joke about personal space and other glancing references to the coronavirus, was that challenges generally bring opportunity and the event was mostly aimed at highlighting the richness of Kern's economy.

There were signs of concern about the virus nevertheless. Valley Strong Credit Union and Cal State Bakersfield's School of Business and Public Administration provided the sanitizer spray bottles while, in a room crowded with about 300 top business and government leaders, some attendees elbow-bumped rather than shake hands.

Even Thompson's speech was circumspect as he noted Bank of America was "not necessarily" convinced a recession is looming. He affirmed that the world is "in a slowdown period" because of the virus but asserted that "no one understands what the next couple of months look like."

Timing was partly to blame for Wednesday's presenters mostly sticking to their scripts: The summit took place just two days after a major stock market decline and a roughly 25 percent drop in oil prices.

One big concern was that business activity would suffer as people hunker down to avoid infection. Thompson said that sort of behavior will affect sales and earnings of every major company in the world.

At a time of falling stock prices, declining bond yields and rising prospects for deflation, he offered what he called one piece of truly good news.

"Consumers are still spending at the rate they have been spending," he said. "That's a real positive."

CSUB assistant professor of economics Richard Gearhart, after discussing the economic value of education and the need for smart regulation of the modern cure-all cannabidiol, noted that coronavirus could hold a hidden benefit for Kern.

As the virus causes Chinese consumers to scale back consumption of Kern agricultural products, Gearhart explained, local farmers will need to find new markets for their exports, which could lower the county's dependence on China.

Other speakers largely avoided mention of the coronavirus, the stock market and oil prices while pushing forward with promotional presentations.

Sean Caffery, senior vice president of business and casino development at Hard Rock International, pointed to the 900 construction jobs and 1,600 permanent positions expected to come with the $600 million hotel and casino project the company proposes to develop in Mettler with the Tejon Indians.

Dede Flemming, co-founder of the firm that puts on the Lightning in a Bottle music and cultural festival, said the event's 2019 debut at Lake Buena Vista brought 14,000 attendees and nearly $6 million in economic benefits.

"I may cough but we have no intention of canceling our festival" this year, he said upon taking the podium Wednesday.

Jake Soberal, co-founder and co-CEO of Bitwise Industries, which is expanding to Bakersfield, said 4.3 jobs were created for every one person employed in the tech industry that has grown up around the company's Fresno hub.

David Janiec, a retired senior executive at China Lake Naval Air Weapons Station, noted that $4.1 billion in federal money has been set aside to rebuild parts of the base after last year's Ridgecrest earthquakes.

The reconstruction project will give Kern County the most modern equipment and base in the country, he said, adding, "(t)he opportunity for growth is tremendous."

John Cox can be reached at 661-395-7404. Follow him on Twitter: @TheThirdGraf. Sign up at Bakersfield.com for free newsletters about local business.

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