Chicago Passes L.A. as No. 1 Factory Center
Job losses in Los Angeles County’s aerospace and apparel industries allowed metropolitan Chicago to edge it out as the nation’s No. 1 factory center, but Southern California remains a dominant manufacturing region because of growth in outlying areas, according to the latest report by a local economic group.
The study by the Los Angeles County Economic Development Corp. documents the ongoing shift in the region’s manufacturing base to surrounding counties where land is cheaper and more abundant. The data show Los Angeles County lost 12,200 factory hands, or 1.9% of its manufacturing work force, in 2000, mainly because of continued downsizing in aerospace.
However, those losses were largely offset by job gains in Ventura, Riverside and San Bernardino counties, where manufacturing employment hit record levels last year.
“A big factor is land. We have it. L.A. doesn’t,” said Inland Empire economist John Husing.
If it were a separate state, the five-county region (Los Angeles, Orange, Ventura, San Bernardino and Riverside) would rank fourth in the nation, behind California, Texas and Ohio and ahead of Michigan and Illinois. If San Diego were added, the six-county region would rank No. 2 after California as a whole.
The report said the nation’s No. 1 manufacturing center is what government officials call the Chicago primary metropolitan statistical area (including the city and metro-area suburbs), which posted average manufacturing employment of 631,500 in 2000. That’s a slim 2,100 jobs ahead of Los Angeles County.
The honors are largely symbolic, since the two metro areas have posted nearly identical factory job totals throughout the 1990s.
Still, industry watchers say continued migration of factory jobs out of Los Angeles County, the region’s blue-collar hub, underscores bigger issues confronting Southern California and its future as a manufacturing center. “There’s this perception that aerospace is dead and apparel jobs are sweatshop jobs” not worth keeping, said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., whose annual manufacturing report will be released today. “But if you want to maintain a viable middle class in Southern California, you need to pay attention to manufacturing.”
Southern California’s industrial sector has fared better than the national manufacturing economy since the economic slowdown began last year. U.S. factory employment has plummeted by 837,000 jobs, or 4.5%, since July 2000, signaling a full-blown recession in the manufacturing sector, according to the National Assn. of Manufacturers. Hardest hit have been makers of durable goods such as appliances, vehicles and machinery.
In contrast, the the Los Angeles County Economic Development Corp. is projecting factory employment in the five-county region to dip only slightly in 2001 to 1,024,800 jobs, partly because of the make-up of the region’s manufacturing. Since the region lost sizable chunks of its heavy industry in previous downturns, its job losses have been more moderate.
Growth in outlying areas has offset continuing losses in old-line industries in Los Angeles County. Orange, Riverside, San Bernardino and Ventura counties all posted gains in manufacturing employment in 2000. Growth was particularly robust in the Riverside-San Bernardino counties area, where abundant land and affordable housing continue to draw expansion-minded firms from Los Angeles and Orange counties. Factory employment in 2000 rose by 5.2% to a record 124,000 jobs in the Inland Empire, whose major industries include furniture making, plastic injection molding, transportation equipment and metal products.
Although the Inland Empire’s factory production has slumped this year, the development corporation’s economists still expect the two-county area to post a 3.2% gain in manufacturing jobs in 2001.
However, the economic group predicts continued weakness in Los Angeles County. Last year the county employed an average of 629,400 manufacturing workers, down 1.9% or 12,200 workers from 1999. The majority of those losses--11,000 jobs--were in the aerospace sector, which continues to be pummeled by consolidation and mergers. The county’s apparel sector, which lost 600 jobs over the same period, is expected to shed a hefty 4,000 positions this year.
The Los Angeles Economic Development Corp. projects the county will lose 7,000 factory jobs in 2001, reflecting higher energy costs and a slowing economy.
Last month Boeing Co. said it plans to slash an additional 600 jobs at its commercial plane facility in Long Beach, doubling the number of reductions announced earlier in the year.
Meanwhile, foreign competition and high energy costs continue to dog the area’s textile and apparel makers. Starting in late 2000, the region’s fabric dying firms were burned by soaring natural gas prices. Prices have stabilized, but many dyers, spooked by the sudden price increase, locked into expensive long-term contracts whose costs are proving tough to pass along to customers, said Scott Edwards, president of the Assn. of Textile Dyers, Printers & Finishers of Southern California. Several large knitting mills and dye houses have closed their doors in recent months.
Although the surrounding region should continue to take up the slack for Los Angeles County in the short run, continued loss of factory jobs from the region’s traditional industrial heart should worry anyone concerned about preserving the area’s manufacturing base over the long haul, said economist Husing.
“L.A. is the 800-pound gorilla,” he said. “The big question is whether you can correct some of what is going on in the core.”
Manufacturers have long complained about the lack of available land, high taxes, fees and the red tape of doing business in L.A. But experts say the more pressing problem may be one of perception. Unlike Detroit, where everyone knows the Big Three auto makers, local manufacturers are mostly small firms that toil in anonymity. Los Angeles County factories employ 2.5 times as many workers as the film industry, yet “people think all we make here is movies,” said Kyser of the Los Angeles County Economic Development Corp.
That has led policymakers to ignore manufacturing, he said, adding that many communities would rather land a giant retailer to reap sales tax revenue than a factory that could provide better-paying jobs for residents. Kyser said that has major implications for the future of the middle class in the region.
From 1987 to 2000, Los Angeles County lost 257,800 manufacturing jobs, two-thirds of them in the high-wage aerospace sector, according to the Los Angeles County Economic Development Corp. The county’s new blue-collar growth has been in low-wage, low-skill industries such as food processing. Even so, the development corporation’s report shows that factory jobs generally pay better than retail. In California, average hourly earnings in nondurable goods manufacturing were $13.59 in July, compared with $11.31 an hour for retail work.
Apparel manufacturing deserves more attention from policymakers, said Linda Wong, work force development director for the Community Development Technologies Center. While clothing production continues to stream offshore, apparel and textiles employ nearly one-fifth of L.A. County’s manufacturing work force.
Wong said the local industry needs help with training and technology investments to improve pay and create a career ladder to retain more local production. “If we lose the low end, we’ll eventually lose the high end,” she said.
