State Reassessing Its Stake in Aerospace Industry : Economy: A study finds that the damage to California from plants relocating in other states is far more severe than supposed.

Aerospace is far more important to California’s economy than previously thought, and the exodus of industry jobs and factories threatens to inflict broad economic damage, according to a major new study to be released today.

The report, conducted by the consulting firm McKinsey & Co. for the Los Angeles Area Chamber of Commerce, is among several high-level efforts in Washington and Sacramento to increase political support for the industry and stem plant relocations to other states.

McKinsey researchers found that the industry accounts for up to 1.4 million California jobs, a far higher number than earlier economic estimates have found. Similarly, they found that the state has lost 60,000 direct aerospace jobs in the current industry downturn, an estimate that is thousands higher than most other surveys.

Separately, Gov. Pete Wilson has begun an intensive effort to examine the loss of aerospace jobs and is scheduled to hold a summit meeting with a dozen aerospace chief executives on May 28.

“It is an indication of how seriously we regard this issue,” Carl Covitz, California secretary of business, transportation and housing, said in an interview Monday. “It is terribly important to the economy of this state. We have had some serious setbacks.”

Covitz cited the continuing political threat to Northrop’s B-2 bomber program, which generates 35,000 jobs in California, and the decision by Lockheed to move production of the advanced tactical fighter to Georgia. In addition, McDonnell Douglas is expected to move production of its next jetliner, the MD-12X, to another state.

In a series of meeting with members of Congress last week, business leaders from Los Angeles cited the McKinsey data in an effort to raise awareness of the potential threat to the state’s economy if the exodus continues, according to Chamber President Ray Remy.

Historically, the California congressional delegation has been deeply divided in its backing of aerospace and little inclined to form a voting bloc to support key programs located in the state. Both the Chamber of Commerce and Wilson are hoping to change that past record by more clearly identifying the economic stakes.

The decision earlier this year by the Air Force not to move the Los Angeles Air Force Station was a reflection of how state and local business could join forces to affect key events, aerospace executives said in interviews. The service had considered closing the base, but relented when state and local agencies pledged to transfer land for the construction of additional base housing.

Indeed, the McKinsey study suggests that California is at a crossroads in aerospace and that if the correct set of policies are put into place, the state could solidify its leadership of the industry by helping firms to better cope with high costs here.

Robert Paulson, director of the aerospace practice at McKinsey, said the Chamber of Commerce group discussed with California representatives last week a wide range of options that could be undertaken to improve the state’s competitive position.

Among the most aggressive options, he said, was a concept for the state to form a common pool of facilities and technically skilled workers that the industry could draw upon. The full set of recommendations would be released today.

But without some policies to stem the current exodus, Paulson said, the state could eventually confront a scenario of collapse, in which jobs and technical capabilities would continue to leave. The McKinsey study found that high wages, high housing prices and costly environmental regulations are the leading reasons that aerospace firms leave the state.

McKinsey estimated that aerospace accounts for 1.2 million to 1.4 million jobs in the state. The reason that is so much higher than prior estimates is that the study took into account jobs at military research centers, university laboratories and service firms that work directly for the aerospace industry, such as accountants and law firms. It also included a general economic “multiplier,” which takes account of the ripple effect on employment in the retail industry and elsewhere in the economy.

The study also addresses the issue of whether California’s congressional delegation is less supportive of aerospace than the representatives from other major aerospace states.

The American Security Council, an association that rates legislators on their degree of support, gave California’s delegation a score of 38 out of 100, according to the study. Meanwhile, Georgia received 75, Texas 72, Florida 71 and Pennsylvania 55. Only New York was ranked lower at 34.

Changing that record is going to require new, tougher political tactics rather than an academic approach, according to Ron Cedillos, owner of a Long Beach aerospace firm. Cedillos, a close political supporter of Wilson, helped to spearhead the Wilson initiative.

Cedillos said it would be necessary to hold the delegation “publicly accountable” for their positions affecting the state economy. He said Wilson became keenly interested in the issue from the night of his inauguration.

Wilson has declined to be interviewed on the subject. But in his weekly radio address on May 4, Wilson blamed the recent defection of Lockheed on high business costs in California and said the state is “engaged in an intense competition for new jobs not only with other states but other nations.” The Chamber of Commerce asked McKinsey to conduct the study after The Times published a three-part series in March about the aerospace exodus.

McKinsey’s estimate of 60,000 lost jobs includes both jobs that were transferred to other states as well as those lost through lower federal defense spending. An informal survey by The Times found that 18,000 direct aerospace jobs in California had been lost because of plant relocations or expansions out of state.

California Aerospace: At a Turning Point* California aerospace jobs: 1.2 million to 1.4 million.

* California aerospace job loss over past four years: 60,000.

* Leading reason for exodus from state: High wages, housing prices, environmental costs.

* Lack of political support for aerospace: California’s congressional delegation ranks at the bottom of major aerospace states in support of the industry.

* Recommendations: Wide range of options, including the creation of a common pool of skilled workers and facilities.