Los Angeles Times Special Quake Report: One Year Later : Still Shaken / Recovery : A Rush of Resilience / Valley Economy on Fast Track Recovery

About 40 business people in Sherman Oaks last week drank iced tea, ate roast beef and met Philip Lader, head of the Small Business Administration, the federal agency that had helped many of them with loans after the devastation of the Northridge earthquake a year ago this Tuesday.

The business people weren’t meeting to tell of broken dreams but of survival and comeback. Resilience --the ability to recover quickly--described the crowd. Each of them had gone right back to work last January clearing damaged premises, getting products out or serving clients with the aid of SBA loans and guidance from local organizations such as the Valley Economic Development Center.

In that, they shared a quality with most business people, residents and public officials all over the San Fernando Valley, the 24-by-12-mile home to 1.3 million residents and thousands of businesses that was the epicenter of the quake and suffered 70% of its property damage.

In the Valley, as in all of Los Angeles, people surprised themselves with how swiftly they recovered their bearings. And that’s worth keeping in mind as the quake’s anniversary approaches. There are lessons for all of Southern California in what was done right this past year.

Resilience is the story of Harman International Industries, the maker of audio speakers that suffered serious damage at its Northridge plant, near the earthquake’s epicenter. Disaster didn’t stop the company from fulfilling contracts to supply speakers to the automobile industry, from which Harman gets 10% of its $1 billion in annual sales. “Those car guys aren’t interested in sob stories,” explains company Chairman Sidney Harman. So he and many of the plant’s 2,500 employees worked long hours and weekends putting sensitive equipment back in operation and turning out products. “We limited lost time to three days due to the earthquake,” says Harman proudly. “These are the best workers in the world.”

Resilience is the word too for Devon Industries, a maker of surgical accessories with 500 employees on De Soto Avenue in Chatsworth. The quake knocked Devon’s plastic molding machinery out of commission, but employees dug through rubble to retrieve the molds--for surgical suturing kits and operating room receptacles--so that production could continue elsewhere.

Then Devon founder Dan Sandel broke new ground in getting an unusually large $9.1-million SBA loan to rebuild his plant by demonstrating the economic effect small firms have on the community. Devon returns to full production at its rebuilt premises next month.

Resilience was on the menu at Michael J’s Italian Kitchen, which was located on Ventura Boulevard near Willis Avenue when the quake hit, destroying apartment buildings and forcing many Michael J’s customers to move away. So owner Michael Ourieff, with help from an SBA loan, moved his business half a mile west to a less damaged area between Kester Avenue and Sepulveda Boulevard, and his 12-year-old restaurant is thriving again.

And resilience defines Actor’s Alley, a theater company that was preparing to open in the restored El Portal Theater in North Hollywood when the quake severely damaged the 1926 structure. The show went on because Actor’s Alley put on plays from July to December in a tent across the street from El Portal, and this year will get to perform in the refurbished landmark, which opens next month.

The economic performance pleased the critics. David Kresge, an economist for Dun & Bradstreet, the credit rating firm, studied the effect of the quake last winter and again in October. “We were surprised at the way people went to work right away and at how quickly the transportation system was repaired,” says Kresge. That made a big difference, he says. “Unlike Northern California after the 1989 Loma Prieta quake, Los Angeles acted, and so its economic pickup has not been reversed.”

For all that, the earthquake’s aftermath is not a made-for-TV movie, with a crisis resolved neatly and efficiently. The $20 billion in total property and financial losses now calculated by Gov. Pete Wilson’s office is a real figure--roughly 10 times the loss in Orange County’s wayward investment fund.

In the Valley, as well as in other parts of Los Angeles and Ventura counties, and in Santa Monica, the earthquake destroyed houses and apartments, industrial buildings and hotels. On some streets, notably at the sites of a dozen or so “ghost towns,” broken apartment buildings lean over like crippled dinosaurs. The business recovery has proceeded faster than home and apartment repairs, often due to simple delay but in some cases because residents and landlords lacked money and didn’t get relief loans.

A Boost on Several Levels

A lot of ordinary people are still suffering financially and emotionally from the quake.

But on the whole, the earthquake’s aftermath gave Los Angeles, and especially the Valley, a boost on several levels. In the short run, it brought a rush of money and activity: $3.7 billion in SBA loans, $10.4 billion in insurance money that has kept construction work humming for the past year and will continue to do so in 1995. Most homeowners are only now getting building code approvals and starting repairs and renovations.

The economic ripple effect is considerable. “You can’t buy a truck; dealers are sold out because small contractors are flush with work and buying new trucks,” says David Honda, a contractor who knew four years of slow business following the 1980s boom.

Yes, such good times can be ephemeral. The Valley had high apartment vacancies before the earthquake, and may again when damaged buildings are restored. The decline in jobs that began with the aerospace downturn has not reversed itself. But unemployment didn’t rise in the quake’s aftermath; jobs lost at damaged businesses were later regained or other work was found.

And beyond the immediate and concrete, the quake has had an ironically restorative effect on the city’s spirit. It has revived confidence, particularly in the Valley, the former land of orange groves that became the homely bedroom and workshop of glittering Los Angeles.

Well, suburb no more. Valley residents are saying today that the workshop has become the city’s economic engine, just as Valley voters--crucial to the election of Mayor Richard Riordan in 1993--have made it the political engine. For the record, Valley businesses turn out about $25 billion a year in goods and services, roughly one-fourth of the city of Los Angeles’ total and 11% of Los Angeles County’s massive $244-billion gross county product.

And the Valley confidently believes those totals will grow, that rebuilt premises will mean new business.

Confidence is the word for Sidney Caplan, who is rebuilding the quake-damaged Radisson Hotel with SBA loans and insurance money. “It will open in 30 days,” Caplan says.

You must be confident of business in the Valley, he is told. “Of course I’m confident. I’ll have the newest hotel in the area, while others are refurbishing,” says Caplan, who started out in construction in Cleveland.

Confidence describes economist Shirley Svorny, a professor at Cal State Northridge, who notes that all the damaged computers in the school’s library are being replaced with “state-of-the-art equipment. I’m told we could even give every student a laptop to work with.”

Being an economist, Svorny doesn’t underestimate the billions of dollars in real losses from the quake. But she recognizes the value of building anew. “We’ll have great looking new stores at the Northridge center and other new structures,” she says.

Confidence and vision imbue Mary Lee, president of Pierce College for the last eight months, after 14 years as president of Valley College. “In the next four years we’ll have a domed theater here at Pierce and a planetarium,” she says.

That confidence and resilience are not merely assets of the crisis moment, says Sanford Paris, head of Paris Industrial Parks, which has rebuilt seven quake-damaged buildings. “This is a place of entrepreneurs,” says Paris. “No matter how crazy your idea, there will be at least two other people who think you’re a genius. It’s like no other place on earth.”

Lessons Learned

Self-congratulation, it’s comforting. But what have we learned from having come through one of the worst disasters in U. S. history? We’ve learned the need to cooperate, says Pierce’s Lee. “Business owners found they needed their good employees, who kept working in trying conditions.”

Lee has a point: Before the earthquake, the Valley and all of Los Angeles was in a funk about the economic downturn, changing populations and urban congestion replacing supposed suburban bliss.

In the quake’s aftermath, however, front office and factory floor rolled up their sleeves and found that every pair of hands was equally valuable. And business people began to talk of “our skilled labor force here in the Valley.”

It’s fashionable to grumble about government, but the performance of public officials was exemplary. The SBA got loans out quickly; city and state agencies succeeded in repairing roads and freeways faster than anybody predicted.

And people everywhere showed dedication, courtesy and pluck. That’s the way to run a city and a society. “Everyone is proud of the resilience and courage of the people of Los Angeles and especially of the San Fernando Valley,” Riordan told last week’s business gathering in Sherman Oaks.

The quake’s big lesson for all of Southern California? Don’t ever doubt how much people can do--and don’t forget how much they did.