Reflections on Healdsburg and Sonoma County

We have finally left Healdsburg after almost two and a half months there.  I had promised myself that I would use the blog to reflect a little on what we see going on around the country as we travel, and Healdsburg provided a good opportunity to see a different part of the country and watch what's happening during the Great Recession.

First of all, you can clearly see that the whole economy of Sonoma revolves around wine and vineyards.  I was surprised to see, after not visiting for some years, how completely the area was converted to wine production.  Fields that used to be regular farms were all endless rows of grapes.  There were wine tasting centers everywhere, some very opulent.  Just in downtown Healdsburg, there had to be ten or twelve.  One of Chris' friends confessed to having worked to install over 5,000 acres of vineyards in his career.  Many of the people we met earned their living working in vineyards or service industries around them.

Well, the local wags have some wisdom to share.  Q. What's the best way to make a small fortune in the vineyard business?   A.  Start with a large fortune.   It seems that the vineyards are often funded by people who made lots of money somewhere else (like Silicon Valley) but now dream of living a different life in the country making fine wines in the sunshine.  It doesn't always work out, but in the current downturn it seems to insulate the vineyards somewhat from collapse.  Many of the backers are very well off, and can afford substantial losses before they fold up. 

So on the surface, at least, the vineyards are still doing fairly well.  There were some out of business and some bulldozed or for sale, and some wine tasting centers were closed, but on the whole the area looked prosperous and rather normal.  The papers reported that wine demand nationally is holding up, although international demand is down, and average prices for a bottle of wine have fallen.  The big multinational vineyard companies have had substantial layoffs locally.  Weekends in central Healdsburg are still quite busy, with lots of tourists coming in, though not as many as before.  People that we talked to were often nervous and concerned, and the housing crash has definitely affected Sonoma County, where property values went sky-high and have imploded.  But so far most people we met are getting along. 

The big weak spot in the local economy seems to be commercial real estate.  The vacancy levels in Sonoma County are dramatic, averaging 24 per cent for commercial buildings.  Worst is in Petaluma, where a lot of the computer firms set up shop some time ago and are now cutting back.  That rate is closer to 40 per cent.  Healdsburg is at the low end with about 16 per cent, but even in Healdsburg the vacancies were very noticeable.  Walking through the central part of town, you could see For Lease signs frequently, even in the most desirable areas of town.  You have to think that if this vacancy rate doesn't improve, the commercial real estate people will be in trouble.  And there's no sign of improvement yet. 

And government is not going to be much help.  The papers are full of the budget cuts being  made at every level, state, county, local.  Budget woes in California are worse than in most places, and nobody seems to have an idea what to do.  

We had dinner with a couple who live up the road in the town of Cloverdale.  Healdsburg has built a reputation as a cute tourist town, and business is holding up there, but in Cloverdale, as the woman said, it's 1935.  She has also recently returned to working for others after having her own business for many years, and she commented on the WalMart-ization of employee/employer relations these days, compared to what it was years ago.  Business people today, she thinks, are obsessed with getting more out of their employees while paying them less.   It makes the job environment oppressive and scary for people, with layoffs always lurking and no place to go. 

But I have to say that on the surface, at least, Sonoma County looked good.  It was a pleasant, sunny area with lots of activity, very busy, and people looked prosperous and reasonably well off.  Houses were lovely and well kept, cars were big and shiny and noisy, and traffic  heavy enough to be annoying.  Individually, people often had pressing issues that were keeping them from being optimistic or up-beat, but then, there are always things to worry about.  I guess my assessment of what I saw was that people were holding together, but a bit fragile.  They have survived the first big wave of the Great Recession, but if a second wave comes along there won't be much in reserve to fall back on.