Possible Writers Walkout Could Hinder Growth of L.A. Economy

Harvey Schwartz is preparing for famine in the midst of plenty.

Business is booming at his North Hollywood-based 20th Century Props. It provides furniture and more exotic set backgrounds to studios stockpiling films and TV episodes in anticipation of a much-feared entertainment industry strike.

But Schwartz knows the good times will end swiftly if the walkout begins. So he’s lining up extra bank loans, warning his staff of cutbacks and seeking sales to customers outside Hollywood.

The worries gripping Schwartz and many other players in the Los Angeles economy these days are well-justified, business analysts say, and not just show biz theatrics.

These analysts say that if Thursday’s breakdown in negotiations between Hollywood writers and major studios is an advance signal of a long strike, the effect could be profound. Business in the Los Angeles area already is expected to slow down this year because of the faltering national economy, weakness among California’s foreign trade partners and the state’s energy crunch.

An entertainment industry strike would make matters even worse. Although the general view is that the Los Angeles area would avoid falling into recession, analysts say its growth would slow sharply from last year’s pace. What’s more, the region’s existing problem with runaway film production could intensify.

Over the long run, “that might be the biggest impact of all,” said Ross C. DeVol, director of regional studies for the Milken Institute in Santa Monica.

But if Hollywood is shut down by strikes--which is still far from a sure bet--the short-term sting could be nasty too.

Even without a walkout, DeVol predicted, overall economic growth in Los Angeles County will slow to 2.3% this year, down from 4.5% in 2000. But he predicted that adding a six-month entertainment industry walkout to the picture would pull growth down to a scant 1.5%.

After a walkout of just two months, DeVol said, “you’d begin to affect all of the supplier industries, and it would feed its way through the entire L.A. economy.”

People who work within Hollywood already are bracing themselves.

Writers’ agent Sara Margoshas heard of the negotiations breakdown via the Internet on Thursday morning and immediately e-mailed her non-show-biz husband: “Got work?” Then she passed on the bad news to her writers, most of whom are members of the Writers Guild of America, the union whose contract expires May 1.

“Clients with assignments are cranking things out quickly,” she said, in hopes of finishing by the May contract deadline. “Those without are asking me to sell harder. Everyone in the industry is talking as if a strike is inevitable.”

In the meantime, many industry veterans are hoarding the cash they’ve raised in the last few months to weather what could be a long, dull spring.

Screenwriter Lisa Beth Kovitz joked months ago that, “If they have a strike, I’m having a baby.” Now three months’ pregnant, she’s made another strike-inspired switch: turning a story idea into a novel rather than a script.

The threat of a strike has “been so long in coming that people have already made adjustments in terms of their consumption,” Kovitz said. “And not just on the big-ticket items. Things like going out to dinner, expense accounts--it’s really slowed down.”

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said the effect would be concentrated in West Los Angeles and the East San Fernando Valley, which are most closely linked to the entertainment business. Areas such as the San Gabriel Valley and the Los Angeles-Long Beach port district would barely notice a change.

By Kyser’s reckoning, the motion picture and television business is one of the “big five” industry groups in Los Angeles County. In employment, Hollywood ranks behind the others: business and professional management services, the health-care and medical research field, tourism and international trade. He said Hollywood probably comes out among the top two or three, though, when it comes to the number of dollars pumped into the county’s economy.

Kyser estimates that Hollywood contributed $31 billion to Los Angeles County in economic activity last year.

He had predicted that the pace of employment growth in the county would slow from 2% last year to 1.8% this year, but now says that that a six-month Hollywood strike could bring the figure down to 1.5%.

For decades, Hollywood has defined much of Southern California’s image, but only in recent years did it take on a lead role in the local economy. The entertainment business, in fact, came to the rescue just in time, when Los Angeles was caught in its devastating recession in the early 1990s. But this year, some economic analysts fear, the industry could turn into a heartbreaker.

Schwartz, a veteran of previous damaging Hollywood strikes dating back more than 20 years, is taking no chances. “I’m going to be prepared this time around,” he said. “It’s going to be hard to make a living in this town.”

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Times staff writer Nancy Cleeland contributed to this report.