1st San Diego Dip Since ’71 : Manufacturing Drops 5.9%; New Jobs Up 5%

Smarting from a slowdown in defense contracts, San Diego’s economy last year registered its first decline in manufacturing output since 1971, a 5.9% drop to $11.4 billion.

The decline came despite a robust 6.8% increase in San Diego’s gross regional product-- the sum total of local economic productivity--to $42.1 billion, according to a study by the Greater San Diego Chamber of Commerce. The local economic growth exceeded the national rate.

Manufacturing employment in 1987 grew by a relatively minuscule 400, or 0.3% to 122,400 jobs, said Max Schetter, the chamber’s director of economic research.

Growth in New Jobs

Despite problems in manufacturing, jobs proliferated elsewhere in San Diego’s economy last year. Total jobs in the county increased by 41,100, or 5%, to 862,900. The county’s unemployment rate was 4.5% last year, significantly below the state and national rates.

Wholesale and retail trade employment grew 4.3%, to 206,100 jobs, and the services sector grew 7.8% to 227,600 jobs.

The stagnation in manufacturing can be traced to cuts in defense spending passed by Congress several years ago, Schetter said. And judging from the continued cuts since, manufacturing output in the county will continue its slide in 1988, he said.

The decline “is all related to defense expenditures, as best as I can trace it,” Schetter said. “A couple of years ago when (the federal government) started to tighten up on expenditures, we said it would take a a couple of years to be felt. Those two years have passed, and it is definitely being felt.”

The most apparent example of manufacturing shrinkage in San Diego is in shipbuilding, an industry that is fast fading from San Diego. Shipbuilding employment in San Diego shrank by another 2,100 jobs last year, to 5,200 employed.

Employment in the manufacturing sub-categories of electronics--electronic machinery and instruments--also showed significant declines in 1987, the study showed. Jobs in aerospace manufacturing, however, grew by 1,100 jobs.