1998, 37 pp.
By: MARK DRAYSE AND DANIEL FLAMING, ECONOMIC ROUNDTABLE
The Economic Roundtable conducted a survey of defense-linked and
other high technology firms in Ventura County in February-March
1998. The survey was commissioned by the Economic Development
Collaborative-Ventura County (EDC-VC). The purpose of the survey
was to determine:
The goal of the survey was to match the financial needs of defense-related
businesses with available funding sources, and to assist them
in conversion efforts. A broader goal of the survey was to increase
the awareness by defense-related and other high technology firms
of available funding sources, and open or reinforce channels of
communication and information exchange between the public and
private sectors in Ventura County.
A survey instrument was designed by the Economic Roundtable in
consultation with the EDC-VC. An initial mailing was sent to 840
firms in February 1998. This was followed by a second mailing
in March 1998 to firms that had not responded to the first mailing.
A total of 185 firms returned completed surveys. An additional
93 letters were returned undelivered by the Post Office. This
resulted in a response rate of 25 percent.
Fifty-two percent of the survey responses were from defense-linked
firms that had at least 10 percent of their total sales in defense
markets in 1990 or 1997. Of the defense-linked firms, 40 percent
reported high defense dependency in 1997 (at least 50 percent
of sales in defense markets).
Defense-linked firms in Ventura County were less dependent on
defense markets in 1997 than they were in 1990. The average defense
dependency of defense-linked firms fell from 51 to 42 percent
between 1990 and 1997. Likewise, the defense dependency of firms
weighted by number of workers fell from 70 to 51 percent during
the same time period.
Total employment in firms with low defense dependency increased
by 63 percent between 1990 and 1998. Total employment in non-defense
firms grew by 57 percent, and total employment in firms with high
defense dependency fell by 5 percent between 1990 and 1998.
Consistent with these trends, firms with low defense dependency
and non-defense high technology firms were more likely to have
experienced growing sales in the past year (1997). Sixty-five
percent of firms with low defense dependency reported growing
sales, compared to 61 percent of non-defense high technology firms
and 47 percent of firms with high defense dependency.
Forty-two percent of the defense-linked firms are currently marketing
defense-related technologies or products to commercial markets.
Firms with low defense dependency were more likely to be selling
defense products to commercial markets. Small defense-linked firms
(fewer than 20 employees) were more likely to be selling defense
products to commercial markets than were larger defense firms.
Three in four defense-linked firms (77 percent) expect sales to
commercial markets to increase over the next few years. Only 1
percent expect decreasing commercial sales. Seventy-two percent
of firms with high defense dependency expect commercial sales
to increase, and 80 percent of firms with low defense dependency
expect commercial sales to increase.
Forty percent of all survey respondents indicated interest in
obtaining financing to expand commercial sales. Forty-six percent
of defense-linked firms were interested in financing, compared
to 33 percent of non-defense high technology firms.
Firms were most interested in obtaining working capital or credit.
Thirty percent of all survey respondents were interested in obtaining
working capital or credit, while only 13 percent expressed interest
in long-term financing and 11 percent wanted high-risk capital.
Only 56 percent of firms interested in obtaining financial assistance
had contacted their bank. Of this group, about one-third reported
that they had received a positive response from their bank. The
remaining firms reported mixed or negative responses to their
requests for financing.
The dominant business strategy stated by firms was to increase
the company's share of its primary market. Two in three firms
stated that they were pursuing this strategy. This was the main
strategy for both defense-linked and non-defense firms, and small
and medium-size firms. Within the defense-linked group of firms,
firms with low defense dependency were twice as likely to be following
this strategy as were firms with high defense dependency.