GM Pledges $18 Million Toward Revitalizing L. A.
General Motors Corp. and its Hughes Aircraft subsidiary--mired in deep corporate slumps themselves--pledged Monday to launch an $18-million program to assist the revitalization of economically neglected sections of Los Angeles.
The five-year program includes a $15-million increase in Hughes contract awards to minority-owned aerospace suppliers in and around the areas touched by the spring riots, said C. Michael Armstrong, Hughes chairman and chief executive officer.
Hughes also intends to move one of its existing business units--as yet undesignated--into the riot zone.
The announcement was made just four weeks after Hughes disclosed plans to lay off 9,000 workers over the next 18 months, mostly in Southern California, because of reductions in defense spending.
“Fundamentally, the fact that Hughes is restructuring to be more competitive is not incompatible with being a responsible corporate citizen,” Armstrong said in response to a question at a press conference at Rebuild L.A.’s downtown headquarters.
Other elements of the GM/Hughes program include:
* Hughes will contribute $1.2 million for educational programs at five inner-city public schools. The contribution will allow for expansion of its K-12 Collaborative Educational Partnership, which currently enhances mathematics, science and technology education at schools in East Los Angeles and Van Nuys and at a specialized high school at Cal State Dominguez Hills.
* GM will commit $1 million to a lending program in concert with major banks that could provide up to $4 million to rebuild existing businesses and start new ones.
* The companies will increase by up to $1 million the amount of corporate funds deposited in minority-owned banks that have community loan programs.
* GM will contribute $250,000 to Rebuild L.A. and lend 100 GM vehicles--mostly vans and pick-up trucks--to community organizations.
“These commitments are aimed at helping solve some of the root causes of Los Angeles’ problems--the need for investments in jobs, business opportunities and education--while also addressing the more immediate needs of Rebuild L.A. and community organizations,” Armstrong said.
Neither the nature of the business that will be moved into the riot area nor the site where it will be relocated has been decided.
Initially, 30 to 60 current employees of the affected unit will be transferred to the new site, Armstrong said. Ultimately, however, he said he hopes that all of the unit’s employees will be hired from the community.
Mayor Tom Bradley and Rebuild L.A. Chairman Peter V. Ueberroth hailed the announcement.
“Jobs are our No. 1 priority,” Bradley said. “The second priority is education, and this offer recognizes that need. . . . When you combine all the facets of this offer, I think it’s a blockbuster.”
GM and Hughes were among the first companies to call Rebuild L.A. with offers of assistance, Ueberroth said. David Barclay, Hughes’ vice president for corporate diversity, said the first meeting to discuss the project was held May 8, one week after the rioting ended.
On Thursday, Vons Companies Inc. said it would make a $100-million investment to construct a dozen new stores in economically distressed areas of Los Angeles County. In the long run, Ueberroth predicted, “hundreds of companies will be long-term players in the rebirth of Los Angeles.”
Ueberroth was clearly miffed and attempted to end the news conference when a reporter asked Armstrong how Hughes could pledge to help Los Angeles so soon after announcing major layoffs.
“My job is to see that when any person steps in (to help), we’ll not have someone chop them down,” Ueberroth said.
But Armstrong insisted on responding.
“We will still have 6,000 people employed who live in this area, and 50,000 throughout Southern California,” he said. “I think this is easy to sell to shareholders. This is our home. This is where we live.”
Wolfgang Demisch, an aerospace analyst with UBS Securities in New York, said he was not surprised by the announcement, despite the company’s recent problems. “Hughes is still the largest industrial employer in Southern California and they feel a proprietary sense of responsibility to the area,” he said.
After the 1965 Watts riot, two major aerospace companies opened facilities in that community. But neither lasted.
Aerojet General Corp. opened a tent-making plant in 1966. The plant, which employed 200 workers, was profitable at first. But after changing hands, it went bankrupt in 1976, its failure blamed on an overreliance on government contracts.
Lockheed Corp. opened an airplane parts plant that lasted until 1988, closing as the aerospace industry began its long downturn. At its peak, the plant employed 350 people building parts for the L-1011 commercial jet and the Navy’s P-3 patrol jet.
Also on Monday, Ueberroth unveiled Rebuild L.A.’s logo and said that at the group’s first board meeting, scheduled for this afternoon, he would begin naming his co-chairs, including Rebuild L.A. chief operating officer Bernard Kinsey.
A New Logo
The official Rebuild L.A. logo--”City Blossom”--was unveiled Monday”
What It Means
The three rings symbolize the community, the government, and the private sector.
The floral motif formed by the rings symbolizes life, youth, growth and hope.
And the rainbow-colored design represents diversity.
