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Losing Northrop Grumman

When Northrop Grumman’s corporate executives in Century City board a Washington-bound jet next year, the company will become the last major military contractor to shutter its headquarters in a region that once dominated the industry. But the real significance of Northrop’s move isn’t that it marks the end of an era for aerospace -- only 300 top executives are leaving, after all, and Northrop will continue to employ 21,000 people in Los Angeles County. It’s that Northrop is only the latest large company to pack up and leave, a trend that hurts L.A.'s cultural, philanthropic and economic interests.

The roster of corporations that built Los Angeles into a major city only to flee or vanish is too long to provide here, but a few of the major players are Hughes Aircraft, Arco, First Interstate Bank, Carter Hawley Hale Stores, Metro-Goldwyn-Mayer, Lockheed and this newspaper’s former parent, Times Mirror. Recent losses include Hilton Hotels, Countrywide Financial and Computer Sciences Corp. Not counting Northrop, Southern California is down to 19 Fortune 500 companies; in 2006, there were 23.

Cities hate to lose corporate headquarters because it’s a blow to their prestige, but L.A. will retain its glamour even if it loses hundreds more suits. The real problem is that the phenomenon creates a kind of vicious circle. A dearth of big companies and their powerful CEOs leads to a lack of business leadership; instead of a few voices lobbying on behalf of a unified business community, there are many -- or, more typically, a swarm of small-business owners who are too busy to be involved in community affairs at all. The result is often anti-business regulatory policies, which prompt even more businesses to flee.

Cities with healthy corporate communities, such as Chicago and New York, offer all kinds of cultural amenities that are underwritten by big business. Not so in L.A., where theater troupes and museums go begging or go under. The same goes for charities, which big companies support as a form of “social marketing.” And the loss of a corporate headquarters is often felt by myriad other businesses, such as law and accounting firms, that support it.

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L.A. still dominates the nation in entertainment and international trade, and it’s a serious player in technology and fashion. Moreover, the diversity of its small-business economy makes it less vulnerable to downturns than some other places (such as Detroit). But its political structure is a little too dominated by labor, with too little influence from employers to serve as a counterbalance. The loss of 300 Northrop executives won’t hurt our employment numbers in the short term; in the long run, it might.


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