The manufacturing base of Southern California is staging a modest comeback in the face of an often-overlooked fact: that Southern California actually has a manufacturing base, and a huge one at that, according to a report released Tuesday by the Los Angeles County Economic Development Corp.
Manufacturing holds much untapped potential for the region, along with presenting many challenges, said Jack Kyser, EDC chief economist and author of the report.
“There are many myths about the Los Angeles area, including such gems as the only local industry is motion picture production. Or, that all the factory jobs ‘went away’ due to the aerospace industry downsizing in the early 1990s,” the report said.
“Guess what? Los Angeles County is still a major manufacturing center, ranking second nationally in number of jobs to the [three-county] Chicago metropolitan area.”
The number of manufacturing jobs in Los Angeles County began growing again last year after eight years of decline, rising 1.2% to 646,100 jobs, the report by the local jobs promotion group said. The EDC projects an additional 2% increase this year to 659,100 jobs.
Orange County is adding manufacturing jobs a little more rapidly. Manufacturing employment is expected to reach 218,500 this year, up 3.2%, which is about the same percentage gain as in 1996.
Overall, Los Angeles County will see a 2.2% increase in jobs from all sectors this year and Orange County will enjoy a 3% boost, according to a separate study released Tuesday by Chapman University’s Anderson Center for Economic Research. The 82,000 new jobs for Los Angeles and the 36,000 new jobs for Orange County represent an upward revision from the economists’ earlier projections.
“In December, when we presented our forecast . . . we were seen as very optimistic,” said Chapman President James Doti. “Now we’re saying we should have been even higher than that.” But Chapman economists noted that Los Angeles still has a long way to go to recapture all the jobs lost during the recession.
The emerging turnaround in manufacturing jobs is being driven by apparel and textiles as well as renewed vigor in defense, commercial aircraft and other high-tech manufacturing, the EDC report said. Apparel employment statistics generate some controversy because skeptics maintain that the growth comes partly from underground contractors who are “going legitimate,” Kyser said.
“Apparel is our Rodney Dangerfield industry,” he said. “They add jobs and they get whacked.”
The manufacturing rebound is reflected in declining industrial vacancy rates in Southern California. L.A. County posted an industrial vacancy rate of 6.7% in the first quarter, down from 8.1% a year ago, according to Grubb & Ellis.
Part of the mission of the EDC is a sort of economic suasion--correcting misperceptions about the region and its economy. In that role, Kyser’s report offers a trove of image-enhancing tidbits, such as:
* The manufacturing base in the five-county Southern California area is bigger than that of 47 states. (California, Ohio and Texas nosed out Southern California.)
* South-Central Los Angeles alone is home to more manufacturing jobs than the three-county Indianapolis metropolitan area.
* Los Angeles County supports more manufacturing jobs than Detroit (415,500) with all its auto-making capability.
* Manufacturing is an industry of small firms; only 176 of the more than 27,000 manufacturing establishments employ 500 or more workers in the five-county area of Los Angeles, Orange, Ventura, Riverside and San Bernardino.
Manufacturing jobs tend to be relatively well-paying, and those tied to exports bring “new” money into the economy, Kyser said.
But the manufacturing sector is becoming increasingly competitive as less-developed companies work to build industry.
Because Southern California cannot compete on costs--"everyone will always be looking for the next low-cost area"--the region must exploit its ability to “add value” to manufacturing through technology or creativity, Kyser said.
The type of manufacturing that will feed the region’s future, Kyser said, comes from small but growing companies such as Irvine-based I-Flow Corp., which makes medical infusion pumps, and Chatsworth-based Chatcom Inc., which produces industrial-grade computer systems for network computing.
“We have a new wave manufacturing base,” Kyser said. “We’re doing a lot of interesting things, but not cars, not steel.”
Times staff writer Patrice Apodaca in Orange County contributed to this report.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Cranking It Out
Manufacturing employment in Los Angeles County is on the rebound after years of decline, thanks to apparel and high tech. Jobs, in thousands:
Source: Los Angeles Economic Development Corp.