Experts See a Resurgence of Manufacturing in Valley
Drawn by a large pool of skilled and unskilled workers, manufacturers are taking another look at the San Fernando Valley, fueling a budding resurgence in the area’s declining industrial sector.
That was the assessment a commercial real estate developer delivered to a group of business leaders Wednesday, expanding upon a new report that gave an upbeat analysis of the Valley’s economy.
The early morning meeting, part of the kickoff celebration for the new San Fernando Valley Economic Research Center at Cal State Northridge, included a review of the well-documented economic recovery in the Valley region, stretching from Glendale on the east to Calabasas on the west and Sylmar on the north.
Included in the review were the usual suspects--entertainment and retailing--and a third player that some analysts and academics had discounted as being of dwindling significance in the post-aerospace era: manufacturing.
But Robert G. Lumley, senior vice president for development with the Voit Cos., said a number of industrial concerns are setting up shop in the Valley, including some that left years ago but returned after failing to find the talent elsewhere that they needed.
“We’re seeing people who pulled out of the city 20 years ago coming back to the Valley,” said Lumley, whose firm is part of a joint venture that, within two weeks, will open the retailing side of a new commercial/industrial center housed in the old General Motors plant Panorama City.
“The Valley has a tremendous labor pool. That’s why manufacturers will always want to be in the Valley.”
The research center’s report, detailed in Sunday’s Times, presents a mixed picture of the region’s industrial strength.
The report, which includes data from more than a dozen public agencies and private groups, found that despite the recent recession and Northridge earthquake, the Valley’s economy is a surprisingly well-tuned engine, powered largely by the entertainment industry.
All told, the Valley region boasts 585,000 private-sector jobs, generating an annual payroll of nearly $19 billion.
On paper, one of the weakest segments of the economy appeared to be manufacturing, where employment generally has been trending down. Between 1990 and 1995, the region lost thousands of manufacturing jobs when GM, Lockheed Martin and Hughes closed major production facilities in the Valley. In early 1983, the Valley had 92,000 manufacturing workers, but by late 1995, fewer than 87,000.
By mid-1997, the number of manufacturing jobs had increased to about 89,000--some improvement, but still 3% below the employment figure for a year earlier.
By contrast, manufacturing jobs rose by 1.5% for the same period in Los Angeles County and 3.2% for the state.
In the Valley, the manufacturing sector accounts for only 15% of private-sector jobs, according to state employment data.
But employment statistics tell only part of the story.
Jim McDonald, president of the Calabasas-based Group 100 real estate brokerage, suggested using a different thermometer to gauge the region’s manufacturing-sector health.
As the new report notes, the industrial vacancy rates have fallen in recent years, and the value of industrial building permits--a clear sign of new construction planned--jumped from $1 million in recent years to $20 million this year.
McDonald said in a telephone interview that you can look at the Valley’s booming industrial real estate market and infer that manufacturing remains a significant force in the Valley.
“There are lots and lots of manufacturers in the Valley,” said McDonald, who specializes in industrial real estate.
“I don’t see any significant difference in the level of manufacturing operations here today, with certain obvious exceptions,” he said, citing GM and Lockheed as notable departures.
Though the exodus of such industrial behemoths clearly took its toll, McDonald and others noted that scores of smaller start-up manufacturers have since emerged.
“The Valley still has tremendous energy being devoted to manufacturing, [especially] high-tech,” said McDonald.
Manufacturing goes beyond making cars or faucets. Many new industries that might be considered part of the entertainment industry, for example, can also be examples of manufacturing.
Jack Kyser, chief economist with the Los Angeles Economic Development Corp., also listed computer electronics and instrument production as growing examples of the Valley’s manufacturing might.
“The Valley still has a manufacturing base,” said Kyser. “And it has the potential to grow. You have a lot of emerging industries that don’t yet show up on the radar screen.”
Referring to the alliance that will bring insulin-pump producer MiniMed to the Cal State Northridge campus, McDonald added: “That’s a manufacturing company, but it’s not the same as manufacturing a car.
“‘We have to get rid of our 19th century notions of manufacturing,” he added. “That’s our problem.”
Calling manufacturing the “backbone” of the Valley, Lumley suggested that perhaps the resurgence in manufacturing is in the beginning phase, with more concrete proof coming in the months ahead.
“Companies in the Valley are growing and other companies are coming back,” said Lumley, alluding to one company, which he declined to name, that will bring 550 manufacturing jobs to Panorama City within the next 12 months. “It will continue to grow, but it doesn’t happen overnight.”
Lumley’s comments followed a presentation of some of the data from the 64-page report on the Valley, one of the most detailed documents ever produced on the economy of the Valley region, which the report defined as the Valley portion of Los Angeles and the cities of Burbank, Calabasas, Glendale, Hidden Hills and San Fernando.
Shirley Svorny, director of the Research Center, an arm of CSUN’s College of Business Administration and Economics, said in an interview that the report is designed to help foster a closer connection between the university and the community.
Svorny added that in future reports, the center plans to take a closer look at various industry clusters in the region, tax revenue figures, trends in retail sales and busing patterns in the Los Angeles Unified School District.
The report was funded in part by corporate sponsors Arco Foundation, Arthur Anderson LLP, the Voit Cos., the Los Angeles Times Valley Edition, Carole and Lodwrick M. Cook and Carolyn and Sanford P. Paris.
Targeting an audience including everyone from business owners and investors to appraisers and brokers, the report not only increases the visibility of the new center, but also makes Valley-specific data easier to spot.
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Industrial Strength
Even though employment figures from the state present a picture of a declining manufacturing base in the Valley, real estate experts and others see trends that belie the disheartening statistics. Industrial vacancy rates are at historically low levels and Los Angeles reports an uptick in industrial construction.
Industrial vacancy rate in the Valley
New industrial building permit values in the Valley*. (in millions of dollars)
* Los Angeles portion
Source: San Fernando Valley Economic Research Center
