Job Growth Seen in Southland in ’04

Strong defense spending and international trade should help the Los Angeles area economy recover this year, with the five-county region creating jobs at a faster rate than the state and the nation, according to a new forecast to be released today.

In its annual report, the Los Angeles County Economic Development Corp. predicts that employers in the Southland will add 77,300 to their payrolls in 2004. That’s less than half of the number of jobs created annually during the late 1990s, and many of the new positions expected this year are likely to come in low-paying industries such as retail and tourism.

Still, any job gain would mark a turnaround from a small net loss in payrolls for the Southland in each of the last two years. What’s more, other measures of regional economic growth, such as personal income and taxable sales, are projected to advance at a healthy pace.

“Almost all sectors of the Southern California economy are on a positive track or close to it,” said Jack Kyser, chief economist of the LAEDC, a business-supported research group based in downtown Los Angeles.

Both Los Angeles and Orange counties shed jobs in 2003 and the year before, largely because of deep cuts in manufacturing and information services, which includes the high-paying motion-picture business. Although neither sector is expected to bounce back this year, other employers across a spectrum of industries are likely to step up their hiring in the coming months.

For the full year, Los Angeles County’s payrolls should increase by 30,100 and Orange County’s by 22,300, according to the LAEDC.

The balance of the 77,300 new jobs will come in comparatively low-cost Riverside and San Bernardino counties, which will continue to outpace their neighbors in the rate of growth. Ventura County, meanwhile, isn’t expected to see any increase in jobs in 2004, partly because of anticipated cutbacks in its public-sector payrolls.

By the LAEDC estimates, which are in line with most other forecasts, the five-county area’s job growth rate will amount to 1.14% this year -- slightly ahead of what’s expected for California and nearly double the national rate.

The Southland’s relative advantage is its diverse economy and greater market share in faster-growing industries, among them international trade. With the global economy set to recover this year, the Los Angeles area is expected to reap the benefits of increased exports. The L.A. area is the West Coast hub for the movement and warehousing of goods from all over the world.

Economists at the LAEDC say the value of exports and imports moving through the Los Angeles area probably will jump by 10% this year to about $259 billion.

Ike Miura, who manages the Los Angeles branch of the German-based distribution services firm Shenker Stinnes Logistics, says things began hopping late last year. In November and December, Miura’s crew in Carson handled 10,000 pounds of disc drives shipped by air from Malaysia to computer plants in California and Texas. That represented a 40% jump in monthly volume from a year earlier.

“What I’m seeing, things will start to pick up,” said Miura, whose operation employs about 60 workers. By year’s end, Miura figures, he’ll have 10 additional employees on hand -- office clerks and warehouse workers with salaries averaging about $35,000.

Aerospace companies are bulking up too, thanks to rising federal spending on defense and homeland security. The Pentagon’s prime-contract awards to California in fiscal 2002, the last year for which data are available, exceeded $23.8 billion. That was the highest in a decade and lifted the state’s share of such awards nationwide to 15%, according to the California Department of Finance.

The Bush administration’s recent proposal for a 7% hike in the 2005 defense budget will keep the momentum going in the region, where work is done on programs such as the C-17 military cargo plane, as well as the F/A-18, F-22 and F-35 fighters.

Northrop Grumman Corp. Chairman Ronald D. Sugar said last week that he expected the Century City-based company to hire about 2,000 workers in Southern California this year.

Chicago-based Boeing Co., the largest private employer in Southern California with about 36,000 employees, says it is planning to add 1,000 workers in its Huntington Beach facilities over the next 12 months.

Taken together, these jobs will help reverse at least 12 years of consecutive payroll declines in the region’s aerospace manufacturing industry. This year, the LAEDC estimates, Los Angeles County’s aerospace products and parts sector will add 2,100 jobs, boosting its total count to 42,800 -- compared with 118,700 in 1991.

Even with this burst of hiring, however, the Southland’s manufacturing employment overall will shrink further in 2004, with electronics makers continuing to slim down and Los Angeles County’s large garment industry shedding 5,000 more jobs, according to the LAEDC.

The loss of manufacturing jobs -- for which pay averaged $43,300 last year -- reflects the continued fallout from the state’s relatively high business costs, competitive pressures from overseas and, in Kyser’s view, neglect from policymakers. “Nobody pays attention to manufacturing anymore,” he said. “Everybody is chasing after retail for the tax dollars.”

Indeed, retail probably will account for 1 out of every 4 jobs created this year in the five-county region. The industry’s average pay: about $26,700 in 2003, according to payroll data compiled by the state Employment Development Department.

LAEDC economists say the area’s second-biggest job generator will be tourism, adding more than 16,000 workers. Most of these jobs won’t provide a living wage, with annual pay averaging a little more than $23,600.

But spending by out-of-town visitors will pump up the regional economy, supporting other businesses and jobs.

Some anticipate getting a boost from domestic travelers lured in part by major rides opening at Disneyland, Universal Studios Hollywood and Knott’s Berry Farm.

“I think that will make a big difference,” said Michael Collins, executive vice president at LA Inc., the Convention and Visitors Bureau.

Among other highlights of the LAEDC forecast for 2004:

* One of the pillars of Los Angeles County’s economy -- the motion-picture industry -- will shed an additional 2,400 jobs, bringing overall employment down to 110,500 from a high of 146,000 in 1999.

* Business and professional services, such as accounting and banking, are expected to show modest growth in payrolls. On the plus side, there’s rising demand in environmental science and engineering, as well as strength in the housing sector.

* Government employment will be a big drag just about everywhere. The five-county region can expect to lose a total of more than 20,000 public-sector jobs, which last year paid an average salary of $47,900.

* Technology employment will stabilize. The combined payrolls for computer manufacturing and design, aerospace, biotech, software publishing and scientific research should eke out a gain of 1,200 positions in Los Angeles County. That will lift employment in this grouping to 165,700 -- a far cry from a high of 284,000 in 1991.