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Monday, May 16, 2022

Year review

By BENJAMIN MARK COLE

Contributing Reporter

The huge Los Angeles regional economy chugged forward in 1997, creating thousands of new jobs, boosting fortunes for retailers, real estate agents and others, while shrugging off industry consolidations and a rash of corporate defections.

It also was the year that the O’Malley family agreed to sell the Dodgers to a unit of Rupert Murdoch’s News Corp.

Even as other local business icons like Great Western and Northrop were gobbled up and duplicative workforces laid off the number of jobs in Los Angeles County grew to 3.94 million by November, up 1.6 percent over the year-earlier period, as measured by the state Employment Development Department.

Moreover, some economists maintain that the official figures undercount true job growth by missing the self-employed, or those in smaller upstart companies that elude the radar screens.

In a civic sense, 1997 was a year in which Los Angeles seemed to regain its footing, after perhaps the toughest decade in the postwar era a period marred by a deep regional recession, riots and earthquakes.

In 1997, Disney Concert Hall moved markedly closer to being fully funded, a downtown sports arena was given a green light, the splendiferous $1.3 billion Getty Center was opened, the massive $8 billion seaside Playa Vista mixed development lurched toward construction, and the Alameda Corridor actually started construction.

“Every so often we go through a phase where we build big things, either business-wise or civic-wise … these big things will have a major, favorable impact on the area,” said Jack Kyser, chief economist of the Economic Development Corp. of L.A. County.

But the big news was that the Los Angeles economy was back on track.

In industry after industry, the bywords were growth and demand and there were even worries about having too much work and not enough labor, particularly skilled labor.

“Finding skilled machinists is not easy, particularly for some of the more advanced equipment in use today,” said David Goodreau, president of the California Industrial Leadership Council, who owns a metal machine shop in Glendale.

From investment banks to high-end metal fabricators, the complaint has been about a shortage of experts or skilled labor.

At Jefferies & Co., the Westside investment bank and brokerage, “We are turning away deals and becoming a lot more selective about how we spend our time,” said Chris Kanoff, managing director in charge of the equities department.

An Ernst & Young LLP accountant in Los Angeles, in charge of the firm’s mergers practice, said recently that he has unfilled positions offering “$200 an hour.”

In general, the business of high finance has never had it so good. Downtown-based money manager Capital Research & Management Co. has $212 billion under management roughly double the level of just two years ago.

“The last 15 years have been good … especially the last couple,” said Chuck Freadhoff, Capital Research spokesman.

Real estate, mired in financial quicksand for years, almost became a scarse commodity in some parts of Los Angeles in 1997, with premier Westside office property selling briskly for large sums.

The Century City Plaza Towers went for $400 million, and billionaire Marvin Davis bought Fox Plaza, also in Century City, for $400 per square foot, nearly a record sum. Even downtown office towers, regarded with skepticism by investors through most of the decade, have become popular, with Sam Zell, the big REIT (real estate investment trust) king, buying the 550 S. Hope St. tower.

Larger, more sumptuous homes in upscale neighborhoods were in hot demand, commanding prices 25 percent and more higher than just a year earlier, according to Mark Giberson, spokesman for the California Association of Realtors.

In October, the median price of a house sold in Manhattan Beach increased 25.2 percent above the year-earlier level, while home values in West Los Angeles rose by 22.5 percent, in Palos Verdes Estates by 17.1 percent and in Beverly Hills by 10.7 percent, according to the CAR.

Even the historic backbone of the Los Angeles economy manufacturing regained momentum in 1997. The number of production manufacturing jobs increased to 663,900 as of November, up 1.7 percent from the like period a year earlier.

While manufacturing growth was fairly steady across the board including aerospace there was strong growth in the garment district.

Apparel employment in the county grew to 120,300 by November, an all-time high, and up 4.1 percent from 115,500 a year earlier.

Hollywood had another good year. Employment was up 2 percent from a year earlier, while $5.8 billion in ticket sales were generated at domestic movie theaters through mid-December, up 6.8 percent from the like period in 1996.

After the guest-drought of the early 1990s, hotels are doing good business again; Southern California hotels were more than three-quarters full for much of 1997, up from the 60 percent or so rate reached in the nadir of the early 1990s.

Another sign of increased visitors: Passenger traffic at Los Angeles International Airport through October was running about 5 percent ahead of last year’s pace.

Not only are people passing through Los Angeles, business was booming at the huge Los Angeles and Long Beach harbors so much so that Union Pacific choked on the volume in September and October, delaying shipments.

The total dollar volume of imports and exports through the Los Angeles Customs District rose 10 percent in the first three quarters of 1997 to $136.8 billion, when compared with the like period in 1996.

To be sure, not all is rosy in the area’s economic behemoth.

Venture capital, for one thing, remains paltry. Northern California’s Silicon Valley garners the lion’s share of venture funcing, but even San Diego and Orange counties despite much smaller populations and business bases easily outscore L.A. in getting venture money.

If Los Angeles is emerging as a high-tech center, it is not recognized as such by money mavens or Wall Street.

Meanwhile, personal bankruptcies in Los Angeles remain at recession-level highs, and real estate foreclosures mostly of homes are nearly unabated from recessionary highs.

Clearly, even in good times, some fraction of the local workforce is either not at the party, or deciding not to pay their bills.

And, more than ever, Los Angeles seems bereft of a Fortune 500 headquarters presence. In 1997, Northrop Grumman Corp. was bought by Lockheed Corp. (which itself moved away a couple of years back), which, in addition to continuing cuts at other former headquarters here such as First Interstate or Coast Savings gives off the image of a region without major corporate powers or leadership.

But in general, a sense that the good times are back pervades most of the local business scene. “When you look at good years and bad years,” said Kyser, “this has been one of the good years.”

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