Category: Business

January 11,2015

Weak economies abroad coupled with a stronger dollar put a dent in California’s merchandise export trade in November 2014, according to a Beacon Economics’ analysis of foreign trade data released by the U.S. Commerce Department.

The state’s merchandise export trade in November totaled $14.89 billion, down nominally 2.2% from the $15.22 billion in exports recorded in November 2013. “This seems to be inconsistent with the broader news of a sharp contraction in the overall trade deficit,” said Christopher Thornberg, Founding Partner of Beacon Economics. “But that number is due to the collapse in import prices, particularly oil, which causes nominal imports to fall faster than nominal exports.” Overall, U.S. exporters in November saw the value of their merchandise trade shrink by 0.6% from November 2013.

The state’s exports of manufactured goods declined 2.8% from $9.63 billion to $9.36 billion. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) fell 12.5% from $2.45 billion to $2.14 billion. Re-exports meanwhile rose by 7.7% from $3.14 billion to $3.38 billion.

“In these numbers, we see the co-mingled effects of a strong dollar, weak overseas demand, and congestion at the state’s major seaports,” said Jock O’Connell, Beacon Economics’ International Trade Advisor.

Still, owing to the more robust export growth recorded earlier in 2014, California’s merchandise export trade through November totaled $159.40 billion, 3.8% ahead of the $153.53 billion reported at the same time in 2013. That means that the state remains on course to set an all-time record for merchandise exports.

A Closer Look At The Numbers

As always, Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations may occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., September-November) with the corresponding period one year earlier.

California’s merchandise exports during the latest September-November period totaled $44.86 billion, a nominal gain of 1.3% over the $44.29 billion recorded during the same period last year.

The state accounted for 10.7% of total U.S. merchandise exports over the latest three months. California’s export trade is highly diversified, with eleven different major categories of goods each accounting for at least $1 billion in exports during the latest three months.

Performance, however, was highly variable, with six categories showing declines in exports from the same period last year. Topping the export list in this year’s September-November period was Computer & Electronic Products ($11.26 billion, up 2.2% from $11.02 billion); Transportation Equipment ($4.77 billion, down a slender 0.5% from $4.79 billion); Non-Electrical Machinery ($3.78 billion, down 3.7% from $3.93 billion). Miscellaneous Manufactured Commodities — a catchall category of merchandise ranging from medical equipment to sporting goods — was up 5.6% from $3.50 billion to $3.70 billion, while Chemicals rose 4.4% from $3.44 billion to $3.59 billion.

There was also a sharp decline food shipments. Exports of agricultural produce declined by 9.0% from $4.50 billion to $4.09 billion, while exports of processed food products fell by 10.0% from $2.71 billion one year ago to $2.44 billion during the September-November 2014 period. Beacon Economics cautions against assuming this is a function of the drought. “Farm employment in the state has been at a ten-year high and agricultural income in the second quarter of the year hit an all time high level,” said Thornberg. “This suggests that the impact of the drought on the state’s agricultural industry has not been what much of the rhetoric might imply.” The decline is due, in part, to softening food commodity prices and port congestion, which is much more of an issue for perishable products.

Exports of Petroleum and Coal Products, which had been increasing briskly over the past three years, saw a 10.7% jump in the period, from $1.66 billion to $1.84 billion. Electrical Equipment also looked especially robust in the latest period with a 33.6% leap from $1.35 billion to $1.80 billion.

Mexico solidified its status as the state’s single largest export destination during the latest three-month period, with the value of exports increasing by 9.3% from $6.22 billion to $6.79 billion. Exports to Canada dropped 5.8% from $5.22 billion to $4.92 billion, while shipments to China fell by 5.2% from $4.08 billion to $3.87 billion. Japan (down 11.7% from $3.34 billion to $2.95 billion) and Hong Kong (up 7.4% from $2.32 billion to $2.49 billion) rounded out California’s ‘Top Five’ export destinations in the September-November period.

Regionally, California’s exports to the Asia Pacific region (including Australia and New Zealand) dropped 3.0% from $17.51 billion to $16.97 billion. Remarkably, considering the ongoing economic travails of the European Union, California’s exports to the EU edged higher by 2.6%, going from $7.38 billion to $7.60 billion. California exports to Latin America and the Caribbean (excluding Mexico) leapt 18.5% from $2.46 billion to $2.91 billion. The state’s exports to Sub-Saharan Africa amounted to only $195.2 million, down 6.0% from $208 million during the same period in 2013.

By mode of transportation, 42.9% of California’s $44.86 billion merchandise export trade in the most recent three-month period was shipped by air, with Los Angeles International and San Francisco International Airports accounting for the vast majority of the state’s airborne trade. Seaports handled 32.4% of the state’s export trade, while the remaining 24.7% of the state’s exports traveled overland by truck or rail to Canada and Mexico.

California Exports: The Near Term Outlook

There is little reason to be sanguine about the prospect for near-term improvement in the state’s merchandise export trade, O’Connell said.  The strong dollar that made American goods and services more expensive for foreign businesses and consumers in November grew even stronger in December. Seaport congestion also worsened toward the end of the year and likely stymied or even discouraged some exporters from shipping goods abroad. And adverse economic conditions throughout much of the world outside of the U.S. offered no real encouragement for exporting.

On the upside, as Beacon Economics has noted previously, a sizable portion of the state’s export trade is destined for factories in Mexico (and Canada, albeit to a lesser extent) that produce finished products for export back to the United States. “So long as the U.S. economy continues to expand, California’s export trade is thus buffered, at least partially, from economic travails abroad,” O’Connell said.

Morro Bay Bed Tax Revenue Increase Tops 17 Percent

A recent report to the Morro Bay City Council says the city’s TOT revenue is 17.6% higher than the same period a year ago showing robust growth in visitation.

The increase in bed tax monies comes as visitors enjoyed record low gas prices the second half of the year. The council decided to join a countywide marketing effort recognizing the bet is likely to pay off.

The uptick in hotel room occupancy is nationwide with Smith Travel reporting a few days ago that in 2014, the U.S. hotel industry sold more rooms and will have generated more room revenue than ever before,” says Jan Freitag, senior vice president of strategic development at STR,  The company anticipates occupancy to end the year at around 64 percent, a level unseen since 1996, according to a recent STR press release.

Morro Bay/Bike Club To Establish Bike Park

The City of Morro Bay and a countywide bike club have agreed to establish a new bike park on the edge of town at the gateway to a popular bike path in the nearby foothills.
The city owned vacant lot is at trailhead for Little Morro Creek Road. The bike group,Central Coast concerned Mountain Bikers have agreed to fund raise, build and operate the park that should help attract more visitors to the city.
San Luis Obispo is considered a mountain biking and road biking paradise, which is why one of the best road-cycling teams in the world —Team HTC-Highroad—trains in San Luis Obispo, and national races like the Jeep, King of the Mountain Race and the AMGEN Tour of California have been held in the city and county.

New Carbon Tax in California Does Not Slow Gas Price Drop

A new carbon tax on gasoline in California aimed to encourage fewer emissions that went into effect January 1 was expected  to increase  gasoline prices by around 10 to 12 cents potentially halting the six month free fall in fuel prices in the Golden State. But that did not happen despite a blip in price for a few days. Figures from Gas Buddy slow the average price in the state did rise after the 2nd of this month for few days by around 3 cents. But by this week (Jan 10) the average price is down to $2.61 per gallon – lower than it was on January 1. Todays lowest station price statewide is $2.14 a gallon.

Wet December Followed by Bone Dry January So Far
Hope for wetter days ahead

A wet December in California – over 200% of average in many locations – greened the hills of the Golden State but has been followed by several weeks of little or no rain in 2015.
Forecasters looking ahead say there is hope that after the Martin Luther King holiday storms could return to the state.One forecast says expect rain events in southern California and northern California but not much in the middle.( see map)
On the hopeful side the state’s top reservoir Shasta – increased its storage by near 100% over the past 6 weeks .The northern California precip index stands at 112% of average today says the state but in the Valley the average is around 60%.

Farmers Leary Of More Dry Weather

Experts say California farmers lost $2B in 2014 – – A new study by the UC Davis Center for Watershed Sciences estimates some stunning losses to California agriculture last year, and indicates losses in 2015 could be even worse if drought conditions do not improve. “We estimated about $2 billion, $2.2 billion worth of damage, economic damage to the State of California. About 17,000 jobs were lost, just in agriculture,” Watershed Sciences Director Jay Lund, Ph.D., said. Lund said recent rainfall and snow have helped, but the state needs more major storms to slow another year of losses.

December 30,2014
Ensign Oil Services of Bakersfield has noticed they plan to lay off 700 workers in coming weeks. The Canadian-based oil field service company that mans oil rigs in California filed a mandated notice with the state this week.

While plunging oil prices have been good news for California motorists at the pump, it has been a different story at the drilling end with growing pain in oil producing areas like Kern County.

Oil prices have dropped about 50% this year with the expectation of less oil being produced going forward in Kern County, the state’s largest oil producer.  Almost 12,000 are employed in Kern County in the oil business.

Local officials expect a big drop in property values as a result, putting budgets in shock.

The US oil patch including Texas and Wyoming expect a similar pattern. Earlier this month Halliburton Co. , the world’s second-largest oilfield-services company, said Thursday it will lay off 1,000 employees outside the U.S.

December 26,2014

The nation’s number three bank – Citibank is closing 9 Central California branches in the next few months as they seek to concentrate their efforts in the large urban areas.

NY-based Citibank filed a report with the Comptroller of the Currency in early December announcing the impending closures of  branches in Chowchilla, Madera, Kingsburg,Sanger, their 2 branches in Visalia on Main St in Downtown and their Mooney location,in Porterville and their only 2 locations on the Central Coast – in Atascadero and Paso Robles.

According to the latest FDIC market share report – Citibank has just  3.73% market share inside Tulare County in terms of deposits – ranked number 11 of all banks here. Tulare County-based Bank of the Sierra   is top bank with a market share of 18.20% followed by Bank of America and Wells Fargo. Citibank has $162.5 million in deposits in Tulare County compared to $794 million for Bank of the Sierra.

Citibank has three offices in the county – all of which now will be closed in by early next year.

The FDIC reports for the Tulare County market for 2013 shows Citibank with a 4.23% share with $168 million in deposits- showing the bank has fewer deposits than the year before

In the Valley, Citibank will keep its Hanford branch,Reedley and Selma locations as well as a handful of offices in the Fresno-Clovis area.

On the Central Coast the closure of the Atascadero and Paso Robles   locations will mean Citibank will have exited the region.

Citibank is a global bank with more offices outside the US than in. Their presence in California is relatively recent – since 2002 when they bought California Federal Bank.

Already an urban oriented bank,Citibank’s 983 North American branches are concentrated in major metropolitan areas including New York City, Chicago, Los Angeles, San Francisco, Washington, D.C., Miami, Boston, Houston, and Dallas

In addition to standard banking transactions, Citibank markets insurance, credit cards, and investment products. Their online services division is among the most successful in the field, claiming about 15 million users.

As a result of the global financial crisis of 2008–2009 and huge losses in the value of its subprime mortgage assets, Citibank was bailed out by aid from the U.S. government. On November 23, 2008, in addition to initial aid of $25 billion, a further $25 billion was invested in the corporation together with guarantees for risky assets amounting to $306 billion. Since this time, Citibank has repaid its government loans in full,resulting in a net profit for the U.S. government.

In total US bank branches have been shrinking even as services   become more electronic and ATMs pop up everywhere.

By one count US banks have shut 2,599 branches in 2014 against 1,137 openings, a net loss of 1,462 that is just off 2013’s record full-year total of 1,487, according to SNL Financial. The move brings total U.S. branches down to 94,752, a drop of 1.5 percent.Bank of America has shuttered the most.

Earlier this year Citibank was said to be seeking bidders for about 50 branches holding $3 billion in California as the third-largest U.S. lender pares brick-and-mortar outlets according to a Bloomberg story.
Bloomberg said the branches were located in rural areas from Sacramento to north of Los Angeles,and could sell for more than $100 million.

With no announcement it appears the sales effort fell short.

Citigroup had 384 branches in California holding close to $48 billion in deposits as of June 30, according to the Federal Deposit Insurance Corp. Earlier in2014 Citibank sold 21 branches in Texas in December to BB&T Corp.
“We continue to rationalize our branch footprint in North America by reducing the number and size of our branches while concentrating our presence in major urban areas,” Chief Financial Officer John Gerspach said on the company’s first-quarter earnings call.

December 15,2014

US Senate Passes Omnibus Bill Saving Visalia Jobs

On Saturday the US Senate passed the omnibus spending bill insuring no government shutdown.President Obama has said he will sign the bill. Among the riders in the bill is the ‘Expatriate Health Coverage Clarification Act of 2014’’ that insures Cigna will not shutdown their US offices including in Delaware and in Visalia California where they employ 700

Kern Oil Down By Half Since January

MidwaySunset Oil from California’s largest oil field in Kern County is likely to fall below $50 a barrel December 15 ,half of its value at the first of the year. Chevron says they paid $51 a barrel as of Friday as the price of California crude has been falling in tandem with west Texas crude.This oil field holds approximately 18% of California’s estimated reserves, 532 million barrels.

The drop may be good news for most consumers but Kern County, the state’s top oil producer looks to lose big time. A Kern media report says Kern County stands to lose millions of dollars in property tax revenues if the price of oil continues to fall. “Oil has fallen from $99 a barrel down to $72 yesterday, which is a huge drop,” said Kern County Assistant Assessor Anthony Ansolabehere on Thursday. The price on Jan 1,2014 for a barrel of Kern County crude Midway Sunset was $99 a barrel and has continued to fall, most of that drop in the last six months. “It’ll affect the county’s assessed (property) values, that’s going to drop billions of dollars off the assessed value,” said Ansolabehere. That translate into millions of dollars off the county property tax rolls.”

Another report says “Kern County faces around a $30 million dollar budget deficit in the next fiscal year if the precipitous drop in the price of crude oil persists, a country analyst said Friday.”

Lodi Loses General Mill Cereal Plant

Looks like you are not eating enough cereal these days  with the loss this month of a Lodi landmark, the General Mills plant that has been part of the fabric of this Valley town since 1948. Some 430 jobs at the plant will be lost when it closes this year.General Mills had a 25 percent drop in its most recent quarterly sales.U.S. cereal sales were a $13.9 billion market in 2000 but fell to $10 billion by 2013 and could go as low as $9.7 billion this year. Modesto Bee reported” Increasingly, Americans are looking for healthy, portable breakfast items that require little preparation, spurring cereal industry analysts to coin a new term, “snackfast,” to describe breakfast.”

December 13,2014

Lake Fills Early

Ruth Lake, Humboldt County’s primary water reservoir, was declared 100% full by water district officials on December 11, 2014.Carol Rische, General Manager for Humboldt Bay Municipal Water District (HBMWD) said, We are happy to say that Ruth Lake went from 69% to 100% capacity since the end of October, 2014. Ruth Lake typically fills during the December – January time frame. This is the fifteenth earliest fill date in the District’s history.

Half Of California Ski Resorts Open Now

Some 12 out of 24 California ski resorts are now open for winter ski season after this weeks storms. Several Central Valley resorts are now expecting to open in the next few days.

 

Badger Pass Ski Area Opens for the 2014/2015 Season on December 14th

As the original Northern California ski area, Badger Pass has been a favorite for generations of families. Unpretentious, friendly and affordable, Badger Pass ski area offers a unique and stress-free winter sports experience. Featuring one of the best sundecks in the Sierra, you can watch your children learn to ski or snowboard while enjoying the California sunshine. Badger Pass is a full-service ski resort offering ski and snowboard instruction, rental equipment, a ski shop, childcare, and a cafeteria and lounge. Without snow-making equipment, Badger Pass depends on Mother Nature for snow and that makes the operating season subject to favorable conditions.

CHINA PEAK OPENING SATURDAY, DECEMBER 20

from ski resort’s website

This storm has moved on but not before dropping 18-24 inches of snow over the past 28 hours, just terrific. The next wave of snow could come as early as Monday, with perhaps several inches up to a foot forecasted by midweek, more great news. We are looking forward to a great holiday season of skiing and riding.

With this new snow we will be opening on Saturday, December 20. How many lifts and trails will of course depend on the snowfall and temps between now and 12/20, but we expect to have a good part of our terrain open from top to bottom.

 

Wet Wet Ahead Expected

Here is the 7 day precipitation forecast from NOAA showing northern California getting another 4 to 6 inches

December 13,2014

Cutler-Orosi Chamber To Close

The Dinuba Sentinel reports that the Cutler-Orosi Chamber of Commerce expects to close operations unless  new volunteers save the day. The business groups with just 20 members runs on volunteers..
“Unless we can get more help we will be stopping the Chamber for awhile,” Cutler-Orosi Chamber President Yvette Alvarez. “It’s hard to get people involved. Everyone is busy. Usually it’s the same five people doing all the work.”Their annual awards dinner held every January for the last 65 years has been canceled.

Visalia Hotel Occupancy Jumps 19 Percent

October hotel occupancy in the Visalia/ Porterville metro area jumped  19% year-over-year says Smith Travel. Hotel occupancy was up from 63% in October 2013 to 75% in October 2014.

Free WI-FI Will Blanket City of Lindsay

The Lindsay Unified School District plans to provide free Wi-Fi throughout the City of Lindsay and will get City of Lindsay cooperation to site  distribution equipment on  various city-owned  structures.

Deer Creek Mine Would Double Volume

Tulare County is circulating a draft EIR for the Deer Creek Rock Surface Mine who operates a rock and gravel surface mine east of Avenue 120 and Road 272, Porterville on 28 acres and would increase annual production from a maximum of 500,000, to a maximum 950,000 tons per year. – Increased truck hauling would be expected from a maximum of 200, to a maximum 350 round trips per day.

December 10,2014

Parts of California could get rainfall totals of over 13 inches between Thursday December 11 and Thursday December 18 according to a NOAA forecast estimate.

The totals include a series of vigorous events hitting this Thursday-Friday and again Monday,Tuesday and the following Friday that could put all this in the impressive category.
Today forecaster John Lindsey in SLO said Thursday/Friday’s “total rainfall amounts are expected to range between 2 and 4 inches throughout San Luis Obispo County, with higher amounts  in the Santa Lucia Mountains, Thursday afternoon into Friday morning.  This system is expected to produce very heavy rain in Northern California. In fact, Some main stem rivers in Northern California are expected to reach flood stage.”

“Snow will also fall in the Sierra with snow levels starting out rather high and above 6,000 and 7,000 feet before falling rapidlyThursday to near 4,000 and 5,500 feet Thursday afternoon and night with 2- and 3-feet of snow possible above 7,000 and 8,000 feet and 1- and 2-feet between 6,000 and 7,000 feet.

Another cold front will produce moderate gale-force to fresh gale-force (32- to 46-mph) southerly winds and moderate to heavy rain on Monday into Tuesday, followed by another storm system next Friday.  These system will be colder and more typical for this time of year with snow levels across the mountains and Sierra in the 3,000 and 4,000 foot level.”
In the San Joaquin Valley the NWS says the Sierra could get up to 2 feet of snow over the next few days.