Aerospace Jobs on Line, Study Warns : Employment: California must act aggressively to stem the erosion of a vital industry, consultants say.
California could lose 170,000 aerospace-related jobs by the end of the decade if it does not act aggressively to improve the state’s competitiveness, according to a study by a prominent consulting firm.
If that many jobs are lost, major contractors would conduct $4.5 billion less business in California, and the state would lose $300 million in general fund tax revenue annually, according to a study to be released today by McKinsey & Co., a Chicago-based consultant.
The projections were based on the assumption that industry will continue to leave the state at the same rate it has since 1984.
The study, commissioned by the Los Angeles Area Chamber of Commerce, provides 19 recommendations for state officials, politicians, the defense industry and the general public to help stop the loss of aerospace jobs.
Although shrinking Pentagon budgets will reduce defense contracting activity nationwide, California can still keep 900,000 jobs by the year 2000, the study concludes.
“A lot of people think this industry is not worth saving or that it has already moved out,” said Robert Paulson, director of the aerospace practice at McKinsey’s Los Angeles office. “But there is still a significant industry here. What would we have to do to create an industry of 900,000 workers if it were not here?”
While California’s image as an attractive business locale has been tarnished, the report says, it retains many of the strengths that made it the world’s largest aerospace establishment: many top engineering schools, a specialized work force and large-scale industrial facilities.
Even so, California has lost more than 62,500 jobs since 1990 because of smaller Pentagon budgets, a commercial aerospace slump and factory relocations. Company officials have pointed to the state’s high costs, complex regulations and weak political support as reasons for moving operations out of state.
The state’s competitiveness problems have been documented for several years, prompting pledges from state officials to remedy the situation. Last year, Gov. Pete Wilson met with the chief executives of major aerospace companies to discuss their concerns, but today most of those executives say they are disappointed with the results.
The McKinsey report is a new assault on the issue and suggests some innovative solutions. Paulson said the central message of the study is that a collective effort by government, business and the public can make a difference.
Among the report’s key recommendations:
* The state should support aerospace facilities that could be jointly used by the major contractors, such as test facilities, large manufacturing plants and research operations. These shared facilities would help contractors be more efficient and could help keep them in California.
* Major public universities should provide more specific technical training to keep California competitive in key defense markets. Corporations could sponsor research at schools, and the public could support research.
* The state should identify aerospace jobs most vulnerable to relocation and work with companies to see what can be done to keep them here.
