By FRANK SWERTLOW
Here’s a deep dark secret about Los Angeles: Despite the glitz, glamour and international reputation of Hollywood, the entertainment industry remains a relatively small part of the overall economy.
The 238,900 local employees now working in show business make up only 5.5 percent of L.A. County’s total workforce. The economy’s real juice, instead, can be found in a sector that many in Los Angeles once gave up for dead manufacturing, which accounts for 15.2 percent of the jobs.
In fact, L.A. County recently surpassed the Chicago metropolitan area as the No. 1 manufacturing center in the country in terms of employment. In 1997, Los Angeles had 663,400 manufacturing employees, compared with Chicago’s 657,500. Detroit, the third-place finisher, had 443,000 workers, according to the U.S. Department of Labor.
“We are the Rodney Dangerfields of the L.A. economy,” said David Goodreau, chairman of the L.A.-based Small Manufacturers Association of California. “When people think of a small manufacturing business, they think of the blacksmith.”
In fact, L.A. manufacturing shops make everything from ball bearings and flywheels, to medical devices and silicon chips, to elegant glassware and apparel a diverse business mix, especially compared to that of Chicago, which is focused on such sectors as heavy machinery and farm equipment, or Detroit, which is dominated by the Big Three automakers.
The companies are similarly diverse in terms of size ranging from giants like Hughes Electronics Corp., which had 22,000 L.A. County employees in 1997, to small shops like Cisco Bros. Inc., a South Central furniture manufacturer with fewer than 200.
So how did Los Angeles become such a powerful engine for manufacturing?
The making of products has long been a fixture of the L.A. economy. As recently as two decades ago, the huge Firestone plant in South Gate pumped out thousands of rubber tires and the General Motors factory in Van Nuys churned out fleets of Camaros. Lockheed’s aircraft factory in Burbank turned out a steady succession of military planes, from P-38s, to U-2 spy planes, to stealth fighters.
At the height of L.A. County’s manufacturing might in 1987, the region boasted 887,000 employees in the sector.
The end of the Cold War and the rise of the global economy changed that, sending the number of manufacturing employees plummeting to just 638,400 in 1995.
Since then, the situation has turned around slightly. Why? A thriving apparel sector has helped. So has the region’s burgeoning trade with the Pacific Rim. Indeed, key to L.A.’s manufacturing prowess is Los Angeles International Airport and local seaports in San Pedro and Long Beach, which provide manufacturers with a major link to Asia and Latin America. The ports also bring raw materials to Los Angeles for manufacturing here.
“One of the ways you maintain the city’s high performance is its close location to Asia and Mexico,” Goodreau said.
And ironically, the decline of the defense and aerospace industries may also have been a boon to the manufacturing industry. Many downsized engineers and aerospace workers found themselves in a position to start their own firms. This also made them available to become prime subcontractors to larger companies, thanks in part to an infrastructure that was already here.
Of course, L.A.’s new manufacturing sector bears little resemblance to that of yesteryear. One big difference is size. A study by the Economic Development Corp. of L.A. County found 18,101 manufacturing firms in L.A. in 1994. Of those, 86 percent had fewer than 50 employees. Only 113 had more than 500 workers.
In addition to their small stature, many of these firms are located in L.A.’s vast industrial heartland along the Alameda Corridor south of downtown L.A., or in the San Fernando and San Gabriel valleys, far from the media spotlight that tends to shine brightest on the city’s Westside
Another difference is the level of unionization. Of the approximately 300,000 metal workers in L.A. County, for example, only 10 percent to 15 percent are members of a union, according to International Association of Machinists. That compares to national rates of union membership in the metal trades of between 30 percent and 35 percent.
So what does the future hold for L.A.’s manufacturing sector? In the short term, many firms are being hammered by the Asian crisis, which has simultaneously flooded the market with inexpensive imports and eroded overseas demand.
The global economy is taking its toll in other ways as well, luring many manufacturers, especially apparel firms, to shift production to low-wage nations in Asia or Latin America.
Nonetheless, many economists expect the manufacturing sector to continue to post modest growth in the years to come. Specifically, they point to growth in high-tech sector. Boeing Co., which last year acquired McDonnell Douglas Corp., remains the region’s largest private-sector employer, and is likely to continue as a force in the local economy into the near future.
The EDC forecasts total manufacturing employment in L.A. to reach some 689,000 by 2000. And as for L.A.’s glittering entertainment industry? It is only forecast to hit 260,500 by 2000.