Can Los Angeles and, by extension, Southern California become the capital of the 21st century if all the major corporate headquarters leave town?
That’s a question many people are asking as Atlantic Richfield Co. is about to be acquired by London-based BP Amoco, seemingly reinforcing this region’s image as a branch office economy.
“We’re becoming the suburban capital of the world,” says Linda Griego, local entrepreneur and former leader of Rebuild L.A., which was formed to help revive business after the ’92 riots. Griego was only half joking.
The worries over Arco--and all the other headquarters, from Lockheed’s to Home Savings’, that have vanished from this area--are not so much about the real economy, which clearly is thriving. The latest UCLA forecast is that the state will add 1 million jobs this year, with Southern California leading the way.
Instead, the worries are about the future of charitable giving and civic culture in this region. There is no doubt that the loss of the Arco headquarters will hurt.
More than most companies, Arco has contributed money and its top executives’ time to the area’s civic culture. When the Los Angeles Central Library suffered a major fire in 1986, Arco’s then-chairman and president, Robert O. Anderson and Lodwrick Cook, organized the Save the Books program. In 1992, after the L.A. riots, Arco personnel helped small-business owners fill out applications for federal assistance.
BP Amoco Chairman John Browne may have equally civic-minded instincts, but he won’t be here to exercise them.
But that doesn’t mean the philanthropic outlook is gloomy. On the contrary, as the local economy has adapted to changing conditions, new patterns of civic life are developing.
Companies and leading figures in the entertainment industry are more involved in local causes than was the case formerly. Steven Spielberg has set up aid for hospitalized children, and his DreamWorks SKG takes part in many civic efforts.
New entrepreneurs and their companies are coming to the fore, donating fresh thinking and some of the riches of high-tech industry to the common good. William Simon Jr. of the William Simon & Sons investment company contributes to and works for youth causes. Al Mann, inventor of biomedical devices, has donated $100 million to USC and has earmarked $100 million more for UCLA; Gordon Marshall, a previously little-known founder of an aerospace company, gave $35 million to USC two years ago.
Nonprofit institutions, from universities to charitable groups of all dimensions, are contributing money, time and energy to causes ranging from helping the poor and sick to furthering the arts and education. The Irvine Foundation is contributing money and ideas to building up the scientific and academic stature of UC Irvine. The Keck Foundation, contributing funds from the Superior oil fortune, is creating a new Claremont college devoted to biomedical engineering.
“Nonprofit groups are working with great optimism to create a new civic culture” for an ambitious region, says H. Eric Schockman, USC professor of political science and author of the new book “Los Angeles, Toward the 21st Century.”
Yet there is a weakness amid those strengths. The city lacks self-confidence. It may sound odd for the region that contains Hollywood, but Los Angeles and Southern California must be more assertive.
Local residents need to know, for example, that charitable giving in the Los Angeles region exceeds the national average. More than 73% of Los Angeles residents (the percentage is comparable for Orange County) contributed to charity last year, compared with 69% for the nation as a whole, according to a survey by the California Community Foundation.
The foundation, an organizer and distributor of charitable donations for more than 700 trust accounts, conducted the survey in 1997 and again last year because a national organization based in Washington had incorrectly ranked Los Angeles near the bottom of all cities in terms of charitable giving.
Southern California doesn’t get its fair share from major charitable foundations. The region, which contains 7% of the nation’s population, gets only 4% of the grants from such foundations, says professor Xandra Kayden of UCLA’s School of Public Policy. The Boston-New York-Washington area, with 17% of the U.S. population, gets more than half such grants, Kayden reports.
The waning of contributions from the Arco Foundation, which is handing out $12 million this year, will force local groups to look elsewhere. Sister Diane Donoghue of the Esperanza Foundation, a Los Angeles-based group that arranges housing for the poor, is pushing her foot in the door at the Ford Foundation now.
The loss of Arco headquarters, like those of banks and companies before it, would mark the end of an era. But perspective is needed. Southern California is not alone in losing head offices. New York has watched Mobil, Exxon, General Electric, American Airlines and scores of others move in recent decades; Chicago’s largest banks, Continental Illinois and First Chicago, are now owned by companies based elsewhere.
The important point is not what has passed but what is coming along. In Southern California, new growth emerges all the time in entertainment, in the realms of advanced technology from Idealab to Broadcom, and in dozens of biotech companies setting up in the shadows of universities from UC San Diego to Caltech.
In addition, this region has thousands of private companies that are expanding across the nation and the world. That’s where all the job growth is coming from. That’s where a new civic culture will come from as Los Angeles and Southern California move into the 21st century.
James Flanigan can be reached by e-mail at firstname.lastname@example.org.
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The expected $25-billion merger of BP Amoco and Los Angeles-based Atlantic Richfield Co. would be the fourth large oil company merger since oil prices started heading south 18 months ago. The deal would give BP a strong West Coast refining and retail presence and holdings on the U.S. Gulf Coast and in Alaska. But it would probably be bad news for Arco employees, since thousands of layoffs could follow. The companies at a glance and a look at oil industry consolidation:
* Headquarters: Los Angeles
* Chief executive: Mike Bowlin
* Employees: 18,000
* 1998 revenue: $10.3 billion
* 1998 net income: $452 million
* Oil reserves: 2.7 billion barrels
* Natural gas reserves: 8.47 billion cubic feet
* Daily production: 658,000 barrels of crude oil; 2.1 billion cubic feet of natural gas
* U.S. service stations: 1,700 in Washington, Oregon, California, Nevada and Arizona
Arco Stock Price
Quarterly closes and latest on the NYSE:
Tuesday: $74.63, down 56 cents
* Headquarters: London
* Chief executive: John Browne
* Employees: 96,650
* 1998 revenue: $83 billion
* 1998 net income: $4.6 billion
* Oil reserves: 5.03 billion barrels
* Natural gas reserves: 10.5 billion cubic feet
* Daily production: 1.9 million barrels of crude oil; 5.7 billion cubic feet of natural gas
* U.S. service stations: 15,500
BP Amoco Stock Price
Quarterly closes and latest on the NYSE:
Tuesday: $103.31, down $1.69
Recent mergers involving oil companies:
* May 1998: Atlantic Richfield Co. agrees to pay $3.3 billion for Union Texas, a Houston-based oil and gas exploration firm.
* August 1998: Energy behemoths British Petroleum of London and Amoco Corp. of Chicago say they plan to combine in a $48-billion stock deal. The merger is completed in December.
* December 1998: French oil giant Total says it will buy Belgian refiner Petrofina for $11.8 billion.
* December 1998: Exxon Corp. and Mobil Corp. agree to a $75.3-billion merger that, if approved by regulators, would create the world’s biggest publicly traded oil company and biggest non-state-owned corporation.
Source: Company reports, Oil & Gas Journal by JENNIFER OLDHAM / Los Angeles Times