THE TIMES 100 : The Best Performing Companies in California : INDUSTRY REPORT : They May Not Be Mentioned, But They’re Certainly Notable : Many companies not on The Times 100 list for various reasons account for a big chunk of the state’s employment and help power the economy.
California’s publicly owned behemoths--the Chevrons, Safeways, Hewlett-Packards and Lockheeds of the world--aren’t the only game in town, not by a long shot.
Consider that 42.5% of the state’s private-sector employment is in small businesses with fewer than 100 employees.
Consider that 98% of the state’s 475,000 companies have fewer than 100 workers.
Consider that, of California’s 13.4 million job holders, 1.1 million are self-employed.
And consider that the nine-campus University of California has more than 126,700 employees, about 4,000 more than a year ago and nearly twice the level of Pacific Telesis Group, the state’s largest publicly held employer, with 63,657 on the payroll here. Not to mention that the City of Los Angeles employs more than 34,000 workers, with an additional 11,000 at the Department of Water and Power.
To be eligible for inclusion in The Times 100 supplement, companies must be publicly owned and based in California. Therefore, the lists omit a plethora of privately held companies based in California and elsewhere, as well as publicly held corporations with headquarters outside the state (or, increasingly, outside the nation) and countless public agencies, schools and nonprofit organizations.
The good news is that companies with headquarters outside the state provide employment for as many as half of California’s workers, according to an educated guess by Jack A. Kyser, chief economist for the Los Angeles Area Chamber of Commerce. The bad news is that many of the jobs that go hand-in-hand with a headquarters operation--accounting and legal services, purchasing and printing--are being filled outside the state.
“It hurts not to have the companies based in California,” Kyser said. “You always want to have the corporate headquarters. That’s the jackpot.”
Nonetheless, these “significant others” account for a big chunk of the state’s employment and help power the economy.
Among the most significant of the “others” is General Motors Corp., Detroit’s auto giant. Operating in Southern California, GM’s Hughes Aircraft Co., Delco Systems Operations and Van Nuys auto plant accounted for 56,600 jobs in 1990, with payrolls amounting to $2.2 billion. At Hughes Aircraft alone, the job count at year-end 1990 was 45,000. All told, GM Hughes Electronics Corp., which includes Hughes and Delco, had $11.4 billion in sales for 1990, according to MZ Group in San Francisco.
Unfortunately for thousands of Californians, the employment trend at Hughes and other aerospace and defense giants has been decidedly downward because of defense budget cutbacks and the national recession.
According to a recent UCLA study, the state’s aerospace industry--a key force in the California economy, with its relatively high-paying jobs--now employs 322,000 people, down about 52,000 from 1987, the peak of the Reagan Administration’s defense buildup. More than half the loss occurred in the last year, and UCLA’s Business Forecasting Project expects that number to drop to 294,000 by the end of 1992.
General Dynamics, based in St. Louis, last August consolidated two divisions in Pomona and Rancho Cucamonga into one, the newly named Air Defense Systems. Employment there is down to 5,800 from more than 7,300 when the operations merged and from 8,450 at the end of January, 1990.
At year-end 1990, employment at the company’s four other operations in California was 17,873, but that has now shrunk to 17,640.
With California and the rest of the nation mired in a recession, 1990 was a year of layoffs and cost-cutting that jolted many employers and workers. Retailers, major job providers, were particularly hard hit.
Seattle-based Nordstrom, faced with a severe spending slowdown, “looked at the economic situation last August, and we realized we were just overstaffed,” said Joe Demarte, vice president of personnel. The sales staff was cut back. Although three new stores were opened in California in the past year, employment actually shrank--to 13,600 from 14,500.
The California employment of Dayton Hudson, based in Minneapolis, continues to grow because of store openings. Of the company’s 708 stores at year-end 1990, 206 were in California. The company’s Mervyn’s division, with headquarters in Hayward, had 31,000 employees, and the Target discount chain had 19,700. About 30% of the company’s nearly $15 billion in sales comes from California.
As of August, 1990, Chicago-based Sears, Roebuck & Co.’s employment in the state--at its stores and its Allstate insurance, Dean Witter brokerage and Coldwell Banker residential real estate offices--had shrunk by more than 1,800 to 47,800 from 1988 levels. By year-end, the corporation plans to reduce its merchandising work force by 33,000, or about 8%, with an unknown number of cuts coming in California.
Among other big employers are Kaiser Permanente in Oakland, a nonprofit health maintenance organization with more than 50,000 employees and revenue of a whopping $8.4 billion; the Denny’s restaurant chain, a subsidiary of TW Services in New York, with more than 14,000 California employees, and GTE California, a unit of GTE Corp. in Stamford, Conn., with nearly 20,000 workers.
St. Louis-based McDonnell Douglas has nearly 50,000 employees at Douglas Aircraft in Long Beach and McDonnell Douglas Space Systems in Huntington Beach. And American Stores, based in Salt Lake City, employs 64,000 California workers at its 718 Sav-on drugstores and Lucky and Alpha Beta grocery stores. (The planned sale of Alpha Beta in July will reduce the number of stores to 573 and the number of workers to about 52,000.)
Meanwhile, the ranks of California-based companies with overseas owners continued to swell last year. The MCA film studio, one of Hollywood’s crown jewels and employer of 8,300 in the state, was bought in a high-profile deal by Matsushita Electric Industrial Co. of Japan. That followed Sony Corp.’s purchase of Columbia Pictures, which has 2,200 employees in California.
Such foreign investment in California “is a major part of the state’s economy,” said James Lincoln, a professor of business administration at UC Berkeley. “And it will continue to be so.”
INDUSTRY PERFORMANCE Companies by sector Percentage of companies by industry of 619 surveyed. Retail: 4.8% Utilities: 1.3% Aerospace & Defense: 2.7% Energy: 1.6% Entertainment & Leisure: 6.9% Financial services: 13.1% High Tech: 32.1% Other: 37.3% Revenue by sector Percent of $445.9 billion in 1990 (vs. $405.6 billion in 1989) for all 619 companies. Retail: 8.9% (18.7%) Utilities: 5.8% (6.1%) Aerospace & Defense: 8.7% (9.5%) Energy: 20.9% (18.7%) Entertainment & Leisure: 3.6% (3.4%) Financial services: 17.7% (19.1%) High Tech: 14.2% (13.6%) Other: 20.2% (20.4%) Profits by sector Percent of $16.5 billion in 1990 (vs. $17.6 billion in 1989) for all 619 firms. Retail: 2.5% (2.2%) Utilities: 12.2% (12.2%) Aerospace & Defense: 8.5% (6.0%) Energy: 16.9% (17.7%) Entertainment & Leisure: 6.0% (7.2%) Financial services: 17.2% (16.4%) High Tech: 18.2% (16.4%) Other: 18.5% (21.9%) Employees by sector Percent of 2.44 million employees worldwide in 1990 (vs. 2.43 million in 1989) for all 619 firms. Retail: 12.4% (12.7%) Utilities: 3.7% (3.8%) Aerospace & Defense: 13.1% (14.4%) Energy: 6.3% (6.3%) Entertainment & Leisure: 8.0% (8.2%) Financial services: 11.3% (11.3%) High Tech: 19.4% (18.6%) Other: 25.7% (24.6%) Figures in parenthesis are for 1988. Percentages may not add to 100% due to rounding.
