Tech Abounds in Many Forms in Southland

When Chuck Chen founded Ocean Interface Co. in 1984, he could think of no better place to start a company to assemble CD-ROM drives and other computer components than Southern California.

Silicon Valley might remain the mecca of high tech, but in terms of business considerations such as ports, trade with Asia and general entrepreneurial spirit, “Los Angeles is better,” Chen says. “The city makes you feel there is more opportunity and more potential.”

Chen isn’t the only one who thinks so. According to a report to be published next month by the Economic Development Corp. of Los Angeles County and the Los Angeles Regional Technology Alliance, the Southland is home to about 330,000 technology-related jobs at 19,000 companies, in industries as wide-ranging as computer hardware and software, aerospace, biotechnology and entertainment.

All are attracted by the world-class universities, skilled labor pool, strategic Pacific Rim location, and even the good weather of what the new study calls the “technology coast.” Rough estimates compiled from a number of different surveys suggest that as many as 15% of all jobs in Los Angeles, Orange, Ventura, Riverside and San Bernardino counties are technology-related.

Technology industries rank sixth in importance to the Southern California economy, according to the Economic Development Corp., ahead of traditional economic icons such as motion picture and television production and apparel manufacturing.

Certainly, Southern California has plenty of company in reaping the benefits of the burgeoning high-tech economy. San Jose, Santa Clara, Mountain View and other Silicon Valley communities are in the midst of a spectacular boom as its legion of computer hardware and software companies feed the personal computer juggernaut and the exploding Internet industry.

New York, San Francisco and Seattle, meanwhile, are all hoping to become the headquarters for the electronic publishers, game developers and assorted Internet entrepreneurs that make up the new media business. Boston is making a serious run at owning the biotech business, and America Online is helping to boost northern Virginia into the high-tech big leagues.

But even though Southern California doesn’t dominate any specific corner of the technology world, it boasts a diversity of cutting-edge industries that no other region can match.

“I think of technology as being the underpinning of a lot of our economy, including international trade and entertainment and, to a lesser extent, tourism,” says Tom Lieser, associate director of the UCLA Anderson Forecast, which tracks the local economy.

The roots of technology in Southern California can be traced to aviation pioneers such as Howard Hughes and John Knudsen Northrop, who founded companies here in the 1930s to build and test airplanes because of the favorable flying conditions.

Those early firms grew into a booming aerospace industry, with lavish, Cold War-driven government contracts fueling all manner of technological innovation. Even after the dramatic downsizing that followed the end of the Cold War, there are still roughly 150,000 aerospace workers in the Southland, including about 100,000 in Los Angeles County alone, according to the California Employment Development Department.

Aviation giant Boeing Corp. is the largest private-sector employer in Southern California, and anecdotal evidence suggests a resurgence in smaller aerospace firms that supply industry giants such as McDonnell Douglas, Northrop Grumman, Lockheed Martin and others.

“We are still one of the most sophisticated aerospace high-tech areas,” says Jack Kyser, chief economist of the Economic Development Corp. He noted that Southern Californians are working on the X-33 reusable space shuttle and the next-generation joint strike fighter.

NASA’s Jet Propulsion Laboratory in Pasadena, though also the target of downsizing, has been a crucial resource in helping to push aerospace expertise into new areas. About 6,500 JPL employees pursue research and development programs for the robotic exploration of the solar system, and their work increasingly spills over into the private sector.

In the last five years, private companies--including many from Southern California--have recorded $30 million in sales as a direct result of licensing JPL technology, says Merle McKenzie, manager of commercial technology programs at the laboratory. Local companies also use the lab as a technology resource, such as an Irvine company that tapped JPL’s expertise in terrain mapping and global positioning systems to make a product that helps airplanes navigate around obstacles, McKenzie says.

JPLers themselves have a history of spinning off local companies based on technologies they invented at the lab. Sabrina Kemeny left JPL in 1995 to start Photobit, a La Crescenta firm that designs custom image sensors using standard semiconductors. Photobit has already made $2 million in sales and has 25 employees.

Along with aerospace, the other major driver of the local technology industry is Hollywood. Engineers and artists at Digital Domain in Venice, one of the top special-effects firms in the industry, use high-powered machines from Silicon Graphics to create digital illusions, such as a volcano exploding onto a town in “Dante’s Peak” and the flight of an ill-fated lunar mission in “Apollo 13.”

Big studios and small firms alike are also using off-the-shelf computer hardware and software for special effects and tasks such as digital film editing and sound production. Preliminary surveys from the Entertainment Technology Center at USC put the number of digital special-effects companies here between 135 and 150. Another 150 to 200 companies work in the increasingly technology-dependent post-production field.

The entertainment industry is also hoping to capitalize on the emergence of the World Wide Web as a new entertainment medium. Local companies started out designing interactive Web pages to promote movies, bands and television shows, and now Web pages are emerging as an industry in their own right. Dozens of small companies are busy creating “shows” and other content for the global computer network.

Many of them pitch their shows to online services like Microsoft Network and America Online. Just last week, AOL’s Greenhouse Network division announced it would buy L.A.-based LightSpeed Media and set up shop here to produce a dozen online entertainment shows.

The Bay Area Economic Forum in San Francisco estimates that more than 130,000 people in Los Angeles work in the multimedia industry, which includes production of computer games, interactive CD-ROMs and content for the Internet.

Allen Scott, associate dean of the UCLA School of Public Policy and Social Research, counted 188 multimedia firms in Southern California in late 1995, with most of them concentrating on entertainment, games or educational products. More than a third of these companies started out as entertainment firms.

Northern California remains the headquarters for the mainstream computer industry, which is itself now driven in large measure by the Internet explosion. Chip vendors such as Intel, data-networking companies like Cisco Systems and software firms such as Netscape Communications are stoking continued growth in Silicon Valley, as are a dizzying array of firms that provide specialized Internet hardware, software and services.

But for companies betting on Internet entertainment--one of the most promising, if uncertain, new business opportunities--there is no place better to be than Southern California.

“It’s important for us to be close to the entertainment industry because of the way they do business,” says Thomas Lakeman, chief operating officer of Digital Planet in Culver City. “The studios, agencies and talent are all here. You meet people for lunch or bump into each other at a party.”

Many tech company leaders feel compelled to defend their decision to locate in Southern California instead of Silicon Valley or elsewhere, but few feel their Southland location has hampered their growth. They are quick to praise the region’s 11 engineering schools, which have trained many of their employees.

Onetime aerospace workers are another considerable pool of talent for technology industries, especially software and new media. Even one drawback--dirty air--has its advantages: Southern California is a leading center for alternative-fuel vehicle research and other environmental technologies.

Strong local universities are the crucial factor in development of the modest but growing local biotech sector. More than 17,000 people in Los Angeles, Orange and San Diego counties work in public biotech firms, and another 70 private companies in Los Angeles and Orange counties generate additional jobs, according to Ahmed Enany, executive director of the Southern California Biomedical Council.

The biotechnology research at universities such as Caltech and UC San Diego drew the founders of Amgen, the industry’s largest independent company at more than 4,600 employees, to Thousand Oaks. Amgen also benefits from its proximity to UCLA and USC, two schools that are often sites for human clinical trials.

“We spend a lot of our research money on collaborations with universities,” says Amgen spokesman David Kaye. “It’s a two-way street. Being the major local biotech company, a lot of times if there are interesting discoveries being made at universities, they’ll think of us.”

There are a few sobering realities in all of this, of course. Once considered among the most appealing of regions for quality of life, many Southland firms now find that earthquakes, riots and the high cost of living are scaring off skilled recruits from other parts of the country.

“L.A. continues to have a bad reputation because of all of these fascinating things that have taken place here in the last 10 years,” says Curtis Hessler, chief executive of Quarterdeck Corp., a Marina del Rey software firm.

Further, the geographic fragmentation of the area makes it hard to develop the kind of tight-knit community that has grown up around new media in New York’s “Silicon Alley,’ for example. And Los Angeles still doesn’t have a network of venture capitalists and other tech-savvy professional specialists who have been so important to the growth of Silicon Valley.

But the sheer diversity of the region’s technology industries offers some protection from boom-and-bust cycles, along with opportunities for cross-pollination. And with the growth of high-tech around the global showing no signs of abating, the long-term outlook is bright.

“I don’t see why L.A. cannot become another Silicon Valley as far as software and content are concerned,” says Philip Chen, president of Apex Computer Systems in Cerritos, which makes hardware and software for accounting systems. “We have the entertainment industry and we have all the brains here, so we should become the software/Internet/content capital of the world.”

Karen Kaplan covers technology, telecommunications and aerospace for The Times. She can be reached via e-mail at karen.kaplan@latimes.com

* ANNIVERSARY LUNCH: The Cutting Edge held a round table luncheon. D3