A Decade of Deregulation, Defense and Deals : National and international business trends left their mark on Orange County in the ‘80s. Here are some of the biggest local business stories of the last decade.

Banks and S&Ls;

Financial deregulation in the ‘80s brought with it risky lending, insider abuse, mismanagement and fraud. Hundreds of financial institutions failed nationwide, including two dozen in Orange County. None was bigger than Charles F. Keating’s Irvine-based Lincoln S&L;,. The failure could cost taxpayers $2 billion.

Housing Prices

While the building industry entered the ‘80s in a slump, it quickly picked up steam as the recession in the early part of the decade subsided. Orange County became the center of the boom. In 1980, the average new house in the northern half of Orange County cost $158,540. In 1989 the price was $402,071, one of the highest in the nation. Only 14% of local residents could afford to buy a house in the county.

Mergers and acquisitions

Mergers and acquisitions remade the nation’s corporate landscape and vocabulary in the ‘80s. Orange County saw its share of the action. Both Allergan and Beckman Instruments were acquired by SmithKline in the early ‘80s. They were both spun off last year when SmithKline was gobbled up by Beecham Group PLC.

Defense buildup

President Reagan’s 1980 campaign pledge to “rearm America” brought forth a huge military buildup that swelled defense contractors’ coffers and payrolls. Locally, Hughes Aircraft’s Ground Systems Group in Fullerton won a $285-million NATO contract. Other contracts followed, and Hughes’ employment topped 15,000 by 1985. But layoffs soon came as pressures to balance the federal budget and easing international tensions reversed the buildup.

Oil prices

OPEC’s inability to reach production accords deeply shook the oil industry. The Southwest went into recession as prices dropped from near $30 a barrel to $10 in the mid-80s. Several large local energy services went into a tailspin. Smith International, once a thriving Newport Beach oil tool manufacturer, ended up in bankruptcy court before emerging as a smaller company and moving to Texas.

Foreign investment

An invasion of investors from abroad raised some concerns throughout the nation. The British continued to be the biggest outside owner of U.S. property, but the Japanese grabbed the headlines with purchases of high-profile properties. Here in 1987, Japanese-owned Shuwa Corp. bought the Taco Bell building near John Wayne Airport for $64 million.

Airline deregulation

Initiated by President Carter, deregulation of the airline industry took off in the ‘80s. Lifting the reins of regulations spurred greater competition, lower fares, more flights, and consumer complaints. John Wayne Airport opened itself up to more flights and undertook building a new terminal. American Airlines became the dominant carrier here through the acquisition of AirCal from two local developers.

White-collar crime

With deregulation in the financial markets, flim-flammery was in style. Orange County became the home of so many con artists that the area, particularly Newport Beach, gained a reputation as the nation’s capital of con. Authorities responded with the formation of the Southern California Fraud Task Force, which obtained more than 200 convictions of con artists from 1986 through early 1989.

Insider trading

The stock market hit record heights, but many investors felt that Wall Street was rigged. Famed arbitrager Ivan Boesky was sent to jail for insider trading, and junk-bond king Michael Milken faced similar charges. Locally, 15 members of the Karcher family were charged with insider trading in 1988. Most settled, without admitting wrongdoing, by paying fines.

Stock market

After a five-year bull run, the stock market crashed on Oct. 19, 1987, as the Dow Jones industrial average lost 508 points. Ninety-one of Orange County’s top 100 companies lost value that day. But the market recovered quickly. Then a second scare hit the markets on Oct. 16, 1989, when the Dow dropped 190 points. Local firms again felt the jolt--74 of the top 100 losing value--before bouncing back.