COLUMN ONE : Industrial Blues in the Southland : The area is still a manufacturing powerhouse. But a gritty ‘sweatshop economy’ increasingly defines the soul of the work force.
Southern California, goes the big lie, is a palmy oasis of leisurely business lunches, a laid-back haven where the background music is waves tumbling on the beach. Work--if you have to do any--probably takes place in a sleek office building or on glamorous movie set.
In fact, the truth is more gritty than glittery: Southern California remains one of the leading manufacturing centers in the world. Every grinding day, it puts on a blue collar, punches the clock, grabs lunch from a truck outside the factory, gets dirt under its fingernails.
A profound shift is taking place, however, symbolized by the planned shutdown of General Motors’ plant in Van Nuys. Factory growth has mostly been in low-skill, minimum-wage work--”the sweatshop economy,” in the words of Allen J. Scott, an economic geographer at UCLA. More traditional blue-collar jobs are in decline because of high costs, defense cuts and the pressures of global competition.
“If you see the trends that are emerging right now, the consequences are pretty dire,” said Barry R. Sedlik, manager of customer planning services for Southern California Edison, which has been tracking the migration of local companies out of the area.
To understand the consequences, consider manufacturing’s role in Southern California, which extends far deeper into the economic fabric than tourism or even the entertainment industry.
Factories add muscle to the economy through jobs--one out of every five in Los Angeles County. And that does not count the vast, intricate web of service providers--from computer technicians to architects to consultants to printing firms to suppliers to distributors--that rely on industry for their income. This multitude of dealings means tax revenue to local communities, sales to retail stores, business for hotels and restaurants.
“A diverse manufacturing base creates jobs at all levels of skill,” said Richard Weinstein, dean of UCLA’s graduate school of architecture and urban planning. “It’s vitally important to the whole economy of the region.”
Despite the news about GM’s closing and aerospace cuts, the factory base remains amazingly diverse. Southern California plants make everything from space vehicles to basic bolts, guitar cases to flight-control computers. Metals are formed, stretched, melted, remade.
And the region’s basic assets remain: closeness to the Pacific Basin, a labor base of skilled technicians, numerous specialized subcontractors, widely available higher education and--that old standby--the weather.
“You can move your firm to Salt Lake City--but you’re still carting stuff back and forth to Los Angeles to get things done,” argues Jack Kyser, chief economist with the Economic Development Corp. of Los Angeles County.
Clayton Industries, set back from the road on a 22-acre complex in El Monte, is one of the many trying to stick it out. The company produces dynamometers--used in testing auto emissions--and steam generators used in the food, chemical, health care and other industries.
William Clayton Jr., whose father launched the firm in 1930, said his company has reason to stay in Southern California, notably the investment it has made in employees and its easy access to the port, from which products are shipped to Asia, Europe and Latin America.
At the same time, Clayton said, high costs for worker’s compensation, health benefits, land, utilities and taxes make it harder to compete successfully with rivals in other parts of the country. The manufacturer still employs 250 in El Monte, including machinists, technicians and skilled assemblers making $9 or more per hour. Fabricating and welding jobs were switched to Tijuana in the 1980s.
“We have no plans at this point to move any of our other basic skills out of the state,” said Clayton, who is chairman of the Merchants and Manufacturers Assn. He added, however, “If we can’t compete profitably from a California base, then we have to look for a base that we can compete from.”
More than ever, companies are looking outside Southern California.
At least 388 manufacturers have left the area or chosen to expand in Mexico, Nevada or Arizona since 1984, according to Southern California Edison, in what appears the most comprehensive count to date. The number does not include factories based in the city of Los Angeles, which is outside the utility’s service area.
Los Angeles still leads the nation in manufacturing employment, but the county’s total of 859,000 factory workers last year--20% of the work force, compared to 17% nationally--has slipped from about 900,000 several years ago, and from the all-time high of 925,000 in the late 1970s, according to the state Employment Development Department.
Orange County, with less than a third of the Los Angeles total, also has dropped back a bit since the late 1980s. Gains by other nearby counties were far too minor to offset the general decline.
What’s more, the decreases have generally come in what economists call “durable” manufacturing--the making of longer-lasting, more expensive products that rely on a skilled, well-paid labor force. Historically, such jobs have been a crucial rung on the economic ladder for people seeking entry into the middle class.
They are leaving because of labor-saving technologies and business moves elsewhere in the United States and overseas.
“The problem is not so much the growth of the low-end jobs--it’s the shrinkage of better jobs,” cautions Stephen S. Cohen, director of the Berkeley Roundtable on the International Economy and co-author of the book “Manufacturing Matters.”
The shrinkage can be seen in a 15,000-square-foot warehouse at Baszile Metals Service, one small piece of the gritty industrial landscape southeast of downtown Los Angeles. The company distributes steel, aluminum, copper and zinc to makers of aircraft and other products.
A couple of years ago, it employed more than 30 workers, many from South-Central Los Angeles, and paid them as much as $15 an hour. Today, just 13 people handle the diminishing workload, a reflection of cutbacks in aerospace.
“I used to have aluminum up to the ceiling,” recalls owner Barry L. Baszile. “When we were going strong, trucks were coming in and out of the yard all the time, loaded with material.”
On a recent workday, sheets of aluminum were piled no higher than five feet. Looking oddly small in the cavernous warehouse, two workers scrubbed the sheets and stenciled in identification marks. Nearby, a $300,000 piece of metal-processing machinery lay idle.
Things would be worse, Baszile said, except that he has offset his California setbacks by expanding operations in Seattle and Wichita. “We can’t let our business die, waiting for manufacturing to come back to Los Angeles,” said Baszile, a self-made businessman who found opportunity in Southern California after moving from Louisiana with $125 in his pocket.
Little more than a decade ago, Southern California was home to three thriving segments of industry, each of which played a distinct role in the region.
There was old-line, heavy industry, embodied by makers of automobiles, steel, aircraft, tires and other products, firms such as Firestone, Bethlehem Steel, Kaiser, Ford and General Motors. Typically unionized, they offered high wages and benefits. Today they are largely gone, injured by strong foreign rivals. Nobody predicts they will return.
A separate, sophisticated role was played by an overlapping sector of defense, aerospace and high-tech enterprises. Now being hammered by defense cutbacks and other woes, this group has shed tens of thousands of Southern California jobs, with ripple effects through the economy.
Only the third segment of the industrial base has been expanding: the manufacture of lower-cost light or “non-durable” goods, such as apparel, textiles, paper and other products that rely on cheap labor. In Los Angeles and nearby counties, this category gained 46,500 jobs between 1979 and 1990, while heavy industry declined by the same number, calculates Goetz Wolff, an economic consultant who follows manufacturing in the area.
“It’s not good news for the region when you see that in recent times the preponderance of new jobs were at the low-wage ends,” he said.
The news isn’t good because such jobs often provide little upward mobility for their basic production workers and don’t pay enough to support a middle-class life. Compared, say, to aerospace, these industries are less likely to enhance communities through investments in research or advanced technology.
“What you’re getting in manufacturing is an enormous sweatshop economy, and the sweatshop economy thrives very often on immigrant and undocumented labor,” maintains UCLA’s Scott.
Sweatshops. Layoffs. A squeezed middle class. Can Southern California preserve what remains of its traditional factory base?
A giant question mark hovering above the remaining smokestacks is whether the realities of economic competition will be compatible with the desire for a cleaner environment.
In the Los Angeles Basin, factories contribute 15% to 20% of all smog-forming pollutants, and that does not count the big rigs that haul industrial materials on the freeways or petroleum refining operations, according to Bill Kelly, a spokesman for the South Coast Air Quality Management District.
Companies often complain that an oppressive, bewildering bureaucracy makes it harder to comply with local and state regulations. Yet it is also true that many manage to compete, despite the costs of compliance.
Ricoh Electronics began building desktop calculators and cash registers at a single Orange County site in 1973. Today, it employs a Southern California work force of more than 1,100, making photocopiers and other products in Tustin, Irvine and Santa Ana. Employees sometimes jokingly call the Newport Freeway the “Ricoh Freeway,” for the five buildings that sport the corporate logo.
To comply with environmental rules, the Japan-based firm has spent $750,000 on advanced equipment to reduce toxic emissions, and switched from spray painting to a much cleaner process of powder coating--which has the side effect of cutting water use by up to 300,000 gallons a month, according to Phyllis Badham, a spokeswoman.
While such changes have short-term costs, the Southern California location has long-term advantages, including its proximity to the Pacific and educational offerings, she said. “In the long run,” she added, “it’s more profitable for us to change our operations, to operate cleaner.”
Some experts say Southern California could take a big step toward preserving its manufacturing base by building more constructive relationships among business, government and the schools.
Closer ties, they argue, could pay off in a variety of ways, helping industry to comply with regulations, and improving and targeting worker training. More broadly, advocates say government should go farther to promote research and development of new technologies, such as an electric car, that--at least in theory--hold promise for Southern California.
In light of global economic pressures, “an electric car industry can only get off the ground if there’s an effective government policy to support it,” said UCLA’s Scott.
It is hardly clear whether such visions will become reality. All agree, however, that part of what turned Southern California industry into such a colossus was the interlinking, mutually beneficial relationship among countless companies and suppliers. Today, it appears that some of the links are breaking.
The obvious effect of GM’s closure in Van Nuys will be hardship for the many workers who end up on the street. Less obviously, some of the reverberations will reach into the heart of Southern California’s interconnected industrial base.
Miles from Van Nuys, in the San Gabriel Valley, William Clayton notes the auto plant’s passing in his own way: “When Van Nuys shuts down, there are four of our steam generators that will probably be scrapped,” he said. “They’ve been there for 20 or 30 years. We just lost a customer.”
