Smith International Inc.'s announcement this week that it is shutting down its Orange County operations was one of a string of large manufacturing-plant closures to hit the county in the past year, but they are by no means a death knell for industry here.
Instead, economists and labor and industrial land specialists say, manufacturing has been and continues to be a growing and healthy segment of the county’s economy.
Plant closures by companies like Smith, Xidex and Weiser Lock are the result of an ongoing transformation of the county’s industrial base.
“We have clearly seen losses in heavy manufacturing and among large industrial firms in the county, and will continue to see this, but it is more than offset by the growth of small manufacturing firms and research and development firms,” said Dennis Macheski, vice president and research director for the commercial division of Grubb & Ellis Co. in Newport Beach.
The total number of manufacturing firms in the county grew 13.3% in 1987, the last year for which figures are available. In all, state labor market analyst Daniel Johnson said, there were 5,557 manufacturing firms in the county at the end of last year, up from 4,909 inDecember, 1986.
And while other sectors of the economy are growing faster, making manufacturing a smaller percentage of the total job base in the county, the number of manufacturing jobs continues to grow, to 257,200 last month from 214,140 in September, 1986, a 20% increase, according to Johnson.
The lower level of job growth last year represents a shift in the industrial base from large manufacturing companies to smaller and cleaner firms in areas such as electronics and medical technology, Johnson said.
A recent study by Grubb & Ellis shows that while 75% of all manufacturing jobs in the Los Angeles Basin are located within Los Angeles County, 68% of all new manufacturing jobs in the basin in the past 4 years have been created in Orange County, Macheski said.
And Grubb & Ellis industrial leasing and sales agents report a “tremendous” activity in Orange County in the past few years, he added.
In a book published just two months ago, UCLA professor Allen J. Scott, an economic geographer, argued that Orange County is a “model of the new patterns of industrialization” that are at the forefront of a revitalized industrial base for the United States.
In an interview, Scott said that manufacturing employment in Orange County has grown steadily for the past two decades but that it is now concentrated in smaller, entrepreneurial firms with 50 or fewer workers, rather than in the large branch plants of major corporations.
Companies that have announced plant closures and layoffs in the past year for the most part have been large employers who cited cost-cutting as the principal reason.
They include Smith, which said it will lay off 486 employees in Irvine and relocate all of its manufacturing, as well as its corporate headquarters, to existing facilities in Oklahoma and Texas. Smith said weak oil prices forced it to consolidate.
Xidex, an Irvine computer disk maker that had been recently acquired by an Indiana firm, Anacomp Inc., shut down earlier this month. Anacomp said it closed Xidex and laid off 825 workers because the product was becoming obsolete.
Citing the impact of low-cost products from foreign competition, Weiser Lock in Huntington Beach said in August that it would close next year, lay off about 1,100 and reopen as a much smaller company either elsewhere in California or in another southwestern state.
Unocal Corp. said in May that it would close its Brea chemical fertilizer plant by 1991, laying off 136 workers, because of a downturn in the industry.
And in October, 1987, the Laura Scudder’s snack-foods plant in Anaheim was closed and 300 workers were laid off. Borden Foods, which had acquired Scudder’s just a month earlier, said the Anaheim facility was obsolete.
ORANGE COUNTY MANUFACTURING EMPLOYMENT
September, 1986: 214,140 September, 1987: 250,400 September, 1988: 257,200 Source: California Employment Development Department MAJOR COUNTY LAYOFFS IN 1988
Company: Jobs Lost Weiser Lock: 1,100 Xidex: 825 Collins Defense Communicators: 534 Smith International: 486 Allergan: 220 Unocal: 136