Palmdale Finding Its Best Defense Is to Reinvent Itself
Like an aerospace company bidding for a big government contract, the city of Palmdale is making an all-out effort to win over businesses to the idea that Palmdale is where they ought to be.
In direct appeals to specific companies, in a recent billboard advertising campaign in the San Fernando Valley, in magazine ads aimed at corporate decision-makers and in the recent printing of glossy promotional brochures mailed to prospective new employers, the city is hoping to capitalize on its long association with the aerospace industry while broadening and diversifying Palmdale’s business and industrial base.
The most recent and visible result of the city’s efforts is the arrival at Air Force Plant 42 of the Swiss firm SR Technics, a commercial aircraft maintenance and repair firm that had hired 155 workers as of last week and expects to have hired close to 200 by mid-month when it starts operations.
SR Technics’ first job will be a major upgrade and overhaul of a Federal Express DC-10, which will take about 40,000 hours of labor over 15 weeks, according to Alex Kugler, chief executive of SR Technics’ Palmdale operations.
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Palmdale’s history as an aerospace center provides “a work force that can quickly ramp up,” Kugler said, listing the labor force as one of three primary reasons SR Technics chose the city for its North American headquarters. Kugler also cited the extensive airline operations at Los Angeles International Airport, a potential source of business for SR Technics, along with the “support from all levels of government” in providing a number of incentives the company was seeking.
The governmental cooperation was no small matter, according to Danny Roberts, who heads the city’s Economic Development Department. Palmdale by no means snagged SR Technics on its own, he said, explaining that the city, the state, Los Angeles World Airports, Los Angeles County and a number of other jurisdictions and organizations pitched in to woo the Swiss company.
For example, although the city’s work force includes a high proportion of experienced aircraft and aerospace workers, the incentive package included customized training through Antelope Valley College District. Workers hired by SR Technics are already undergoing four weeks of training, said Linda Mandel, the company’s human resources director.
City officials consider landing SR Technics quite a coup because the company could grow to thousands of employees in five to seven years if the business goes as hoped.
But Palmdale also has attracted companies from other parts of Southern California in recent years, as well as a host of new retail stores, including, in the last eight months, Dillard’s department store, Lowe’s Home Improvement, Barnes & Noble, Linens ‘n Things, Ross Dress for Less and a Sport Chalet now under construction.
The retail stores boost the city’s budget through the 1% of sales tax receipts that California cities receive as their portion. Taxable sales in the city have grown from $350 million in fiscal 1990 to $910 million, according to the Palmdale Department of Finance.
Among the relatively new industrial arrivals in town is Senior Systems Technology, a manufacturer of electronic circuit boards that moved from Chatsworth in 1997 and now employs about 350 workers.
Roberts said Sun Valley-based U.S. Architectural, a manufacturer of street light poles, plans to employ about 130 workers at a 100,000-square-foot building the company plans to build on 11 acres of a 120-acre site, where the city is completing infrastructure improvements in an effort to attract new industry.
Trying to build an industrial base is something of a switch for Palmdale, said economist Alfred Gobar of Placentia-based Alfred Gobar & Associates, a business and real estate consulting firm.
“Roughly 35% of the employed people who live in the Antelope Valley commute to jobs someplace else,” said Gobar, who is scheduled to deliver an analysis of the Antelope Valley labor market at a meeting of the Greater Antelope Valley Economic Alliance on Nov. 21.
Gobar said Palmdale’s “real estate sector took a first-rate beating” in the recession of the 1990s, as the loss of residents’ jobs resulted in widespread foreclosures on home loans and the shuttering of many retail establishments that had rushed in to serve the city’s burgeoning population.
But he and Roberts said Palmdale’s aerospace industry didn’t suffer as much as in other parts of Southern California. That’s because Lockheed Martin consolidated its Skunk Works operation from Burbank during the 1990s and moved some of its C-130 maintenance work from Ontario, while Northrop Grumman moved some operations from Pico Rivera, Roberts said.
Gobar said Palmdale has recovered from its darkest days and has surged as a retail center. It’s part of an Antelope Valley retail market that is “hot,” according to a recent report by broker Mark McGaughey of CB Richard Ellis, a commercial real estate brokerage.
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Besides the new retailers mentioned by Roberts, the report noted that El Torito recently opened a 6,500-square-foot restaurant at the Antelope Valley Mall (Avenue P and 10th Street West in Palmdale) and that Tharaldson Enterprises of Fargo, N.D., is investing $10.3 million in two three-story, 90-unit Marriott hotels in the Palmdale Promenade shopping center on Avenue P at the Antelope Valley Freeway.
“The fact that these national retailers have come to Palmdale is testament to the fact that the Antelope Valley is now on the map as a viable market,” McGaughey’s report said.
In its pitches to prospective employers and retailers, Palmdale emphasizes, among other things, its plentiful and low-cost land, low business taxes and a business-friendly city government.
Palmdale ranks as one of the lowest-cost places to do business among cities of 100,000 population or more, according to Tom Jirovsky, an analyst with Kosmont Partners, a Los Angeles consulting firm that produces an annual survey of the cost of doing business in cities throughout the country.
“It has some of the lowest business taxes and impact fees on developers,” Jirovsky said.
For example, he said, the cost of doing business for a professional firm using 30,000 square feet of space is about $1,000 a year in Palmdale, compared with $100,000 for the city of Los Angeles and $10,000 to $20,000 in Burbank, Santa Ana, Long Beach and El Segundo.
For developers, Palmdale’s fees for a manufacturing building total about 90 cents per square foot, versus $4 to $5 in some Southern California cities of comparable size, Jirovsky said.
Nonetheless, Palmdale faces stiff competition when it comes to attracting businesses, he said.
“Santa Clarita also doesn’t have any business taxes to speak of, but it’s closer [to Los Angeles], so Santa Clarita is capturing many of the businesses moving out of L.A.,” Jirovsky said.
Palmdale’s business recruiting success will depend in part on the Southern California economy, to which the city and the Antelope Valley are “joined at the hip,” said David Myers, a former Palmdale City Council member and now North County regional manager at the Greater Antelope Valley Economic Alliance.
The regional recession hit the city hard, Myers said, and the recovery was slow to reach Palmdale but “has started really kicking in now” with new “high-wage jobs” such as those of SR Technics and Senior Systems Technology.
