THE AEROSPACE CRISIS : Many Dislike Task Force's Action Plan : Defense: Business people and economists disagree on recommendations for coping with a downturn in the important industry.


In their first glimpse at a 323-page report on the dire state of Southern California's aerospace industry, economists and business leaders on Tuesday generally agreed with the finding that the state's business climate needs fixing.

But they disagreed sharply on specific proposals by the Los Angeles County Aerospace Task Force for strengthening the region's economy in light of defense cuts, with some expressing skepticism that the recommendations would do much good.

Many raised questions about the effectiveness of proposed public-private partnerships to midwife the birth of new industries to supplant defense. And some dissented from a key recommendation: that the Southland should create an alternative-fuel transportation industry to absorb jobs and expertise from aerospace.

"I think it's unrealistic to think that you're going to get a credible alternative-fuel industry just out of aerospace," said John R. Wallace, director of electric vehicle programs and planning at Ford Motor Co. "It would be kind of like Ford going into the cereal business."

Not so, said Michael Peevey, president of Southern California Edison Co., a major booster of electric vehicles. "Developing an electric transportation industry here could make use of many of the talents of people now employed in aerospace," he said. "There is a tremendous economic opportunity."

The report, commissioned by the county Board of Supervisors, projected that Los Angeles County could lose as many as 420,000 jobs in the next three years and $84.6 billion in personal income in the coming decade because of the aerospace bust.

Yet Robert Poole Jr., president of the Reason Foundation, a free-market think tank in Los Angeles, questioned the task force's main conclusion. "To say we need to totally mobilize the entire government and economy to deal with this is an exaggerated response," he said.

While favoring improvements to the state's infrastructure and business climate, Poole argued against public-private partnerships. "All the times that that kind of thing has been tried in the U.S. and overseas, the record is very poor," he said.

At a news conference Tuesday where the report was released, Supervisor Mike Antonovich said the need for action is urgent. "For many years, we were the cradle of the aerospace industry," he said. "We are ending up as a result of these job losses as the graveyard for the aerospace industry."

Robert Arnold, a senior economist at the Center for the Continuing Study of the California Economy in Palo Alto, supports the task force's push for development of an electric transportation industry. But he cautioned that too narrow a focus on the defense industry might draw attention away from broader structural changes in the economy.

Beyond defense, he said, there remain fundamental problems: high interest rates, high costs of doing business, expensive housing and inadequate water.

Frank Power, chief executive of Sonfarrel, a small Anaheim machine shop, scoffed at suggestions that government and industry can cooperate.

"I would describe that as sanctimonious hyperbole," he said. "The government put us in the situation we are in, and now they are trying to tell us how to get out. We don't need them to tell us how to run our business. What the government needs to do is manage its own affairs."

On the other end of the spectrum, USC economics professor Richard H. Day said the proposed government involvement does not go far enough.

The federal government, he said, should contract with giant defense contractors to rebuild "the central cities in all of the major metropolitan areas in the U.S."

Goetz Wolff, an independent industrial economist and sometime consultant to the task force, said public-private programs can work "to the extent . . . they have a system to evaluate the relationship between program expenditures and actual job creation."

Joel Kotkin, a senior fellow with the Center for the New West and a visiting fellow at Pepperdine University, worried that the process will become political. "We have to be careful that our economic development strategies are not intended to be bailout strategies for large companies," he said.

Many economists argued that the task force's projection of 420,000 job losses stemming from defense cuts is too high. Wolff found more credible UCLA economic forecaster David G. Hensley's estimate of 184,000 jobs lost by 2001.

The Board of Supervisors will meet in Washington this week with the Southland's congressional delegation and White House Chief of Staff Samuel K. Skinner to discuss the aerospace crisis and other issues, according to Supervisor Ed Edelman.

Aerospace Report's Figure on L.A. County Job Loss Clarified By RALPH VARTABEDIAN Los Angeles Times Friday March 20, 1992 Home Edition Metro Part B Page 8 Column 2 Metro Desk 4 inches; 116 words Type of Material: Correction An author of the Los Angeles County Aerospace Task Force's report on the impact of defense cuts says the report's estimate that up to 420,000 jobs will be lost in the county by 1995 is misstated. In fact, the estimated job loss figure includes the rest of the state as well, said Dan Flaming, president of the Economic Roundtable and author of several sections of the report. In Los Angeles County alone, the job losses could range from 184,000 to 368,000 by 1995, Flaming said. Elsewhere in Southern California, 18,000 to 36,000 jobs are likely to be lost. Another 8,000 to 16,000 job losses could be dispersed throughout the state. Flaming said the report should have made the distinction clear. The clarification, however, does not affect other projections involving the impact on housing starts, tax collections and personal income. --RALPH VARTABEDIAN
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