Hed — Turn Out the Lights?

It’s hard not to be concerned about the changing landscape of corporate L.A. As pointed out in our package this week on the aerospace industry (and two weeks earlier on corporate flight), some very familiar names are either leaving town or being dissolved as part of multibillion-dollar mergers.

By now, the list is becoming familiar: Lockheed, Great Western, First Interstate, Vons, Broadway, etc. The pending sale of Northrop to Lockheed Martin (now a Bethesda, Md.-based concern) means that no aircraft manufacturer will be headquartered in Southern California, a notion that would have been unthinkable just 10 years ago.

In their place are growing numbers of subsidiaries, divisions and back-office units that take orders from absentee owners. While some of these operations are significant in numbers of employees San Francisco-based BankAmerica employs more than 11,000 in Los Angeles County their presence and influence pales next to their headquarters city.

Even several of the major Hollywood studios Warner Bros., Paramount and Universal are subsidiaries of bigger conglomerates headquartered elsewhere.

To be fair, Los Angeles has never been a big corporate town certainly not approaching the numbers in New York or even Chicago. This makes the ongoing exodus all the more noticeable and to us, unsettling.

We recognize that Los Angeles is going through a profound economic transition that involves still-evolving industries like multimedia and which places a much greater emphasis on small- to medium-size businesses. The growing economic significance of L.A.’s ethnic communities should not be underestimated either.

Clearly, this is not your parents’ Los Angeles anymore and in many ways, that’s all for the best.

But world-class cities cannot prosper merely on the dreams of startup entrepreneurs. They need a corporate infrastructure that allows for financial comfort, civic leadership and a steady nurturing of talent.

When examining the success of California’s Silicon Valley, for example, consider the benefits of having so many major technology companies: Intel, Hewlett-Packard, Apple and so on. Having such a formidable base provides a centerpiece for ancillary services (most obviously venture capital), as well as many small startup businesses.

Would Silicon Valley work without those huge companies? Certainly, but not nearly to the extent that it works today.

There is no easy explanation for the decline of corporate L.A. Some might point their fingers at the relatively high cost of doing business here or the area’s spotty reputation in recent years, but more often than not, it’s a fundamental business decision: One company seeking out another, whether it’s for greater market share, customer base, product mix or employment skills.

Why L.A. happens to be the home of the snapped-up instead of the snappers is really anyone’s guess, but we suspect that it’s more than just happenstance. And putting a halt to the pattern can’t be legislated by the City Council or Board of Supervisors. It just happens.

The rumor mill suggests that it will keep happening. There are on-again, off-again rumblings that Litton, Coast Savings and GlenFed are among the locally based companies being scrutinized by out-of-towners.

At some point, it must stop or Los Angeles will end up being the largest repository of subsidiaries in the world. That makes it less than the global giant its boosters claim it to be and all the startups in the world won’t change that picture.