Signs of a slump: solemn billboards, shelved plans

Silicon Valley is cradled by hills as gentle as the folds of a blanket.

Right now, those hills are carpeted with spring grass, set off by charcoal-black earth, and serenaded by the chirps of red-winged blackbirds.

Little wonder old-timers know this place as the Valley of Hearts Delight, reminiscent of an era when more than 7,000 fruit farms ruled the landscape.

But memories fade and geography changes. And this year's change of season has brought a rare poignancy to this valley, now a citadel of high technology.

As nature unfolds in all its glory, it is setting off in bas-relief an economic slump that is felt from the dotcom urban chic of San Francisco's South Beach to Silicon Valley's rural frontier of Coyote Valley.

The numbers - layoffs, stock prices, investment, business expansion - are all moving in the wrong direction. Yet the bigger question is whether the Silicon Valley psyche, after so many years of pumped-up confidence, will follow. After all, how must the center of the New Economy feel when some wonder whether the New Economy is already passe?

"I think there is still an overall optimism that this place is a major shaper of the world to come," says Jan English Lueck, an anthropologist at San Jose State University who makes it her business to study the culture of Silicon Valley. "The old-timers, at least, are used to the boom-and-bust nature of this place."

Indeed, Silicon Valley and much of California were ripped from their economic moorings far more dramatically in the early 1990s, when defense-related industries took a nose dive. That wasn't just a down cycle, but a permanent change for areas like Silicon Valley, which has since broadened its base.

Still, from one end of the valley to the other, an unsettling thing has occurred: Things are static, people are watching and waiting, and a region so famous for being breathless seems to be holding its breath.

On the southern edge of Silicon Valley is an area called Coyote Valley. It was here that Cisco Systems, a maker of Internet hardware and for a time last year the most highly valued company on earth, had plans to build a state-of-the-art work community of 50,000 people. Those plans are now being delayed, almost as if the surging tide of Silicon Valley expansion has, at least for the moment, begun to ebb away.

At the northern end of Silicon Valley, a stretch of highway that has become famous for its cluster of technology billboards also seems to mark a change.

When money was good and stock prices seemingly inflated with helium, companies used the pricey billboard advertising to poke fun at one another and tell inside jokes. Now, the billboard ranks have thinned, and the messages have become more direct, even a bit plaintive. "Onward. Upward," a billboard says. "Job good. Life good," says another from

An archaeological dig of Silicon Valley would show one of its formative layers to be the company and culture of Hewlett-Packard. Founded in a garage and now a household word in technology, HP can be said to be Silicon Valley's foundation. Yet even that august firm recently announced managerial layoffs of 4,000.

The newer archaeological strata would be populated by the likes of Yahoo, the granddaddy of Internet portals. This layer shows even more disturbance. Companies rooted in the Internet are dropping like flies, and even the blue bloods, like Yahoo, have had layoffs and executive changes.

To add to the gloom, the industry's lifeblood - electricity - could be in short supply this summer. A local economic group recently painted a dire scenario, claiming blackouts could shave a percentage point off economic growth and produce a full-fledged recession here.

A sampling of how life in Silicon Valley has changed reveals fears among immigrants that layoffs will force many of them to return home. This comes just months after the US Congress doubled the number of so-called H1B visas to accommodate the technology sector's seemingly insatiable demand for more workers.

Yet even with all this, housing prices remain astronomically high, traffic is congested, and public schools are still performing below norm. Everything is relative; however. Unemployment is rising here, but remains at a historically low level of 2 percent. Even though Silicon Valley will add not half the number of new jobs this year as it did last, that means going from gangbusters to normal.

"We're experiencing a significant slowdown," concedes economist Steve Levy of the Center for the Continuing Study of the California Economy, a Palo Alto research group. "But the major risk is that we take our eye off the ball."

By that, Mr. Levy means the risk of slowing efforts to build affordable housing, add transit capacity, and improve schools. "The biggest danger is not of a slowdown, but that we'll stop building for the future."

Few would quibble with that, though in recent weeks Silicon Valley's preoccupation with quality-of-life issues has clearly returned to basics, like jobs.

(c) Copyright 2001. The Christian Science Monitor

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