Valley Interview : Alarcon Hopeful on Post-GM Jobs, but Deal’s Not Done in a Day

Since the General Motors plant in Panorama City closed in August, 1992, eliminating 2,600 jobs, city officials have worked with GM representatives to try to find a buyer for the 100-acre plant in hopes of replacing some of the lost jobs. The plant’s closure sent a ripple through the area’s economy, dramatically reducing business in area restaurants, bars and shops. Councilman Richard Alarcon, who took office last year representing a district that includes Panorama City, has taken a lead role in finding a new occupant for the site. He was asked about the progress in this effort by Times staff writer Hugo Martin.

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Question: How much of an impact would you say the closure of the GM plant has had on the San Fernando Valley and the neighboring community?

Answer: It had two significant impacts on the San Fernando Valley. First, symbolically it represented the wealth of our area: good-paying jobs, good products, America at its best. Symbolically it damaged the spirit of the workers and the people who were somehow affiliated with the plant, whether they were subcontractors or vendors to the plant or even small businesses, such as restaurants along the corridor.

As a practical reality, it certainly caused some interesting repercussions that I don’t think people initially understood. A lot of people, family and friends became long-term unemployed but are still receiving the benefits from the contract that was there. But the strangest thing was that people are now living in places like Georgia or have moved to Tennessee where GM has transferred them. So, it has caused some dislocation of longstanding community members and that is unfortunate because it takes some of the history of the Valley away.

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Q. Are the effects still apparent or have you seen a slow recovery happening?

A. First of all, the contract that was in place when the plant closed allowed for a less visible devastation because the workers are still under contract, still receiving benefits from that contract. Some of them are in school. Some of them are retraining for other kinds of employment. So, it wasn’t as if the plant just shut down and everybody was unemployed, which would have had a devastating effect on the northeast Valley.

But nevertheless, a week doesn’t go by that I don’t run across someone who once worked there.

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Q. There are a lot of restaurants around the plant that were affected. Have those started to recover?

A. Not really. The lunch places suffered and they are still suffering and I think some of the other business in the area that served the workers of the plant certainly are suffering from it. They never recovered.

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Q. Is getting a new occupant in GM a high priority for you?

A. It’s certainly high on my priority list to the extent that there is real opportunity. If there is something substantive, then we will shift gears and address it. I mean there are other priorities in my district.

But clearly it’s a big issue, and if there is an opportunity we will make room to focus on it. I would say we are in that phase now.

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Q. Before it closed, you were former Mayor Tom Bradley’s aide in the Valley. Was there any effort to keep the plant from closing or reduce the effects the closure would have on the area?

A. Absolutely. I was very much involved with trying to establish a task force for General Motors. I worked very close to Assemblyman Richard Katz and Congressman Howard Berman’s office in an effort to forestall the closure. In that capacity we set up a meeting with Mayor Bradley, Berman, Katz and Supervisor Ed Edelman, and we sat down with General Motors. I also put together a group of about 105 business representatives, homeowner groups and elected officials in a major meeting in that same effort.

The intent was going to be to form a task force that would have a three-pronged goal. The first goal was to stop the closure. The second goal was if we couldn’t stop the closure to devise a plan to make it recover as quickly as possible. And the third was to find a specialized industry to be drawn in.

The mayor was very sensitive that we worked very closely with City Councilman Ernani Bernardi (who represented the area at that time). So when Bernardi recommended that we put the task force under the city’s Community Development Department, we didn’t oppose that. Unfortunately, from my perspective, when it went to the Community Development Department, it lost the impetus. So, those 105 people that we had gathered as a task force disappeared.

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Q. What has happened?

A. Well, CDD would meet but the task force in their definition included only city bureaucrats. It didn’t include the political spectrum. It didn’t include the business spectrum. It didn’t include the unions. It was a very limited group.

One of the first things I told to one official who was responsible for that was: “Why didn’t you include those groups that we put in there?” And their response was: “Because we knew it would be a long-term endeavor to make the plant productive.” I don’t think that is the case.

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Q. Is there any progress finding a new tenant now?

A. There is progress, but you don’t want to be overly hopeful. There’s been several different potential deals in the works since I’ve been in office and sometimes you think you are very close to something and it changes. But I’m very encouraged.

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Q. What do you think is the main reason these deals have fallen through? Is it the recession or the site itself?

A. There’s a variety of reasons why. First of all, it’s time. You can’t put together a deal in a day. It takes some time and some consideration and then you have to see what the various alternatives and options are and who is interested. Clearly we are not in the best economy and that has had some impact. But there are people that continue to call about the site.

But as I’ve said, you have to believe that you can do something with it. One of the issues we cleared up when we sat down with General Motors was that I will not sacrifice prime manufacturing land for commercial retail. My fear is the negative impact it will have on the nearby Panorama Mall.

I’m not unwilling to discuss the potential for commercial retail if we are talking about a segment of the site and getting a manufacturing plant of a smaller scale on another side of the lot.

There have been commercial retail interests that have made it clear that they want to move in but I don’t want give up on manufacturing. I’m concerned about the impact on the Panorama Mall. We are gearing to build up the Panorama Mall. It would be a contradiction to build up a huge shopping mall a few blocks away.

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Q. What would you see as the best scenario for the site? What you would like to see happen?

A. I can’t get very specific at all because I don’t want to foreclose on any options that may arise. But I would like to see a concentrated number of jobs. We lost more than 2,000 jobs on this site. I would like to see 2,000 jobs on the site that pay at least $10 an hour. The average wage before was $15 an hour so I think that would be a reasonable goal.

But there may be a combination of operations. It may take five different businesses in there if you parcel it out to get up to that. Some of those jobs may be on the lower end, some on the higher end. But I know right now we are talking to one company where the average wage is well over that. We are really encouraged.

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Q. Have potential buyers raised the issue about possible soil contamination at the site?

A. I think it’s always something people are going to ask. General Motors has said the problem relative to soil contamination has passed, that several years ago their paint operation generated some issues with that. But they cleaned it up.

I think we are not going to finally know until it actually goes into escrow and the buyers start doing their own tests. We have General Motor’s word that there is no significant contamination of any kind.

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Q. Previously you talked about the city acting as a middleman between GM and a potential buyer. Is that still an option?

A. That was one of my ideas. I asked General Motors early on to explore the potential tax benefits of allowing the city, through some nonprofit vehicle, to being a pass-through. When they did that analysis they determined that if their property was appraised at a certain value--I think it was $9 million--that they could accrue some benefits. But when the appraisal actually did come in it was a lot less than they projected. So we are not holding to that formula.

We basically wanted to let General Motors know that the city was willing to find new ways to do business, to make business. I think that message is clear.