Los Angeles has lost its title as the manufacturing capital of the U.S., a spot it has held for the last five years, according to a study being released this week by the Los Angeles County Economic Development Corp.

The loss is not by much. L.A. County's annual average employment in manufacturing was 629,000, 2,100 less than that of Chicago.

But the study of the five-county Southern California area reports a steady outflow of workers over the past decade. Since 1993, Los Angeles County has lost 4.7 percent of its manufacturing employees. Of the 14 largest manufacturing centers in the country, only New York, Boston and Philadelphia have lost a greater percentage.

Jack Kyser, chief economist for the EDC, said L.A.'s drop to No. 2 results from several factors: manufacturing firms moving to outlying counties, continued cutbacks in the aerospace industry, and job losses to overseas producers in the apparel sector. Strikingly, Riverside, San Bernardino, Orange and Ventura Counties have picked up about 18,000 manufacturing workers since 1998.

"A lot of people are talking about building the middle class, but not a lot of people are making the connection between our demographic profile and manufacturing," said Kyser.

Since 1990, more than one out of three manufacturing jobs lost in Los Angeles County has been in the aircraft sector. One example of this contraction is Northrop Grumman Integrated Systems, where in 1993 about 13,000 people were employed on the B2 Bomber. Today, with the B2 no longer being built, the Pico Rivera plant is closed and the remaining people associated with the project number about 1,200, according to Jim Hart, a Northrop spokesman.

Despite prospects of a pickup in defense spending, L.A. County had only 51,600 workers in aircraft and parts jobs last year, down from 58,300 in 1999 and 122,100 in 1988. Kyser said that when aerospace layoffs began to hit Southern California in the early 1990s, "there were lots of people north of 50 who took the buyout and left the state. They were equity rich."

As a result, local manufacturing leadership has shifted away from transportation (which includes aerospace) and toward apparel and textiles, pulling down manufacturing wages in the process. While transportation employees earn an average of almost $20 an hour, apparel & textile employees earn less than half that. So while the number of manufacturing employees is shrinking steadily, their dollars are shrinking more quickly.

The effects of this shift have been felt on a sub-regional basis as well. Because of aerospace downscaling, South Bay/LAX and the San Fernando Valley were two of the harder hit areas in the 1990s. Since 1991, manufacturing employment in the South Bay is down 35.4 percent while the Valley is down 24.8 percent.

The Harbor/Long Beach area also has seen a large drop in manufacturing employment over the last decade, though Kyser attributes this more to real estate pressures than sector shifts. Because of a growing export market, Harbor/Long Beach attracted distribution and warehousing centers, driving real estate up and driving manufacturing firms out. As a result, Harbor/Long Beach has lost 28 percent of its manufacturing workers since 1991.

The region least affected by manufacturing worker losses is the San Gabriel Valley. At just over 99,000 workers last year, San Gabriel lost only 4.7 percent of its manufacturing base since 1991. While larger companies like Redi Pac Produce and Miller Brewing Co. have plants in the San Gabriel Valley, the Valley mirrors the rest of the county in that the majority of manufacturers employ less than 50 people.

Elaine Cullen, director of the Business Assistance Program of the San Gabriel Valley Economic Partnership, attributes that area's manufacturing strength to geographical convenience, smaller cities and the Valley's ethnic mix. Cullen noted the six freeways that cross through the region as well as proximity to the Alameda Corridor as factors in attracting companies.

What L.A.'s manufacturing community has lost in numbers, it has made up for in diversity. In 2000, L.A.'s leading manufacturing sector was apparel and textiles, at 19 percent. By contrast, 40 percent of Detroit's manufacturing community is made up of transportation workers. Other sectors that employ at least nine percent of Los Angeles' manufacturing workers include metal products, transportation, electronics, wood/paper/printing and petrochemicals and plastics.

Apparel's current standing reflects a period of industry prosperity from 1990 to 1997. At a combined 117,300 workers, apparel and textile are the only manufacturing sectors in Los Angeles County that have seen an increase in employees over the past decade. But even the apparel industry has not been immune to outflow of manufacturing work.

"Apparel is one of the few things that is cheaper today than it was five years ago," said Lonnie Kane, president of Vernon-based Karen Kane Inc.

Kane, whose company is a supplier for upscale retailers like Macy's and Neiman Marcus, said he currently employs 150 people, down from a high of 350 in 1995, while doing essentially the same dollar volume in business.

The future could provide an industry role reversal. Hart said that the production of the F/A-18 strike fighter in El Segundo should keep about 2,000 jobs secure through 2010. The joint-strike fighter program, which may be subcontracted by Northrop Grumman, and two unmanned aircraft projects, both of which are in development stages, point to a potential increase in aircraft manufacturing in the later part of the decade.

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