Boeing’s Crash Won’t Crush Now-Diversified South Bay
Even as Boeing Co.’s retrenchment news this week is sending shudders throughout the Southland, there is far less alarm in the South Bay than one might expect from an area that was hit especially hard during the last defense downturn.
That’s largely because the vast region, which stretches from Los Angeles International Airport and the 105 Freeway south to Long Beach, has diversified significantly since losing an estimated 47,000 aerospace jobs between 1992 and 1996. Judging by a recent survey by the South Bay Economic Development Partnership and other measures, the area is on solid economic footing as aerospace employment has started falling again after modest increases last year.
The survey of 100 firms found that business has been good for most; 85% reported that they are planning to expand in the next two years. Most rated the location of their current business highly, and nearly half of the respondents felt the business climate had improved over the last couple of years; only 10% said it has gotten worse.
The survey also reflected the diversification of the region, where roughly 10,000 firms employ more than half a million workers, according to Joe Aro, who heads the economic development partnership. The group was founded in early 1997 and is funded by member cities, businesses and other organizations. Seven percent of the firms surveyed were aerospace companies--a figure that seems to closely mirror the South Bay’s current employment base. Earlier in the decade, nearly one-fifth of the South Bay’s work force was tied directly to the industry.
Growth in business services, motion pictures--such as the recent opening of the Manhattan Beach Studios--and non-aerospace manufacturing have led the area’s resurgence in recent years. John Strockis, managing director at commercial realty brokerage CB Richard Ellis, says the South Bay has about 200 million square feet of industrial and manufacturing space, more than all of Orange County, and this year the vacancy rate fell to a historic low of 2%.
One reason is the expansion of companies like Neo Tech Manufacturing, a health and beauty products maker in Carson. Trudi Bonnet, chief executive and part-owner of the company, says employment has risen from 15 five years ago to about 100 today. She is feeling the slowdown caused partly by Asia, but that isn’t stopping her from growing her business.
“I’m looking at expanding and diversifying,” Bonnet said, noting that she plans to broaden the company’s assembly work and distribution.
As the survey found, there are still plenty of suppliers to the aerospace industry in the South Bay. But a number of them reported that they, too, have diversified and are different companies today than they were at the start of the decade.
Gary Johnson, vice president of Ace Clearwater Enterprises in Torrance, said in an interview Wednesday that he, like others in the South Bay, is nervous about Boeing’s announcement that it will cut up to 25,000 jobs on top of its previous planned layoffs of 28,000. No one knows exactly how many jobs will be lost in the Southland, but Johnson figures the cutbacks may spread to his company, which employs about 240 workers.
Still, Johnson said ACE will do just fine regardless of Boeing. ACE has broadened its business in the last decade, he said, and makes components for power-generation equipment for General Electric, among other non-aerospace companies.
Johnson said ACE is luckier than other shops that bend metal and do other work for Boeing, because some ramped up with expectations of continued production increases. But Johnson said his company has been chasing new accounts instead, including some good prospects in Europe.
“If we did no work at Boeing, we’d be fine,” he said.
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Times staff writer Don Lee can be reached by e-mail at don.lee@latimes.com.
