When the Rodney King verdict sparked rioting in
For some years now,
Just how tempting such invitations can be became apparent last August, when Wilford D. Godbold Jr., president and CEO of aluminum luggage and container manufacturer Zero, announced plans to move two of his company’s divisions and 450 jobs from
“I would very much like to stay,” The New York Times quoted Godbold as saying. “We are nearer the
Godbold claimed the move would save Zero up to $5 million a year. Most CEOs in southern
“New business is not being attracted to the state,” says Les McCraw, chairman and CEO of Fluor, an international engineering and construction company based in
Such long-standing problems have been compounded by the April riots, which killed 58 people and caused an estimated $1 billion in damage-more than five times the figure for riots in the city’s
In an effort to stop the bleeding, Mayor Tom Bradley appointed Peter V. Ueberroth-held in esteem by local leaders for having successfully coordinated the 1984 Olympic Games in
Another snare: The recent recession precipitated a real estate and banking crisis that is reverberating well beyond
“It’s a time of night in LA,” says a local economist. “The media describes it as a version of Hell.”
But despite the recent turmoil, the
Absorbing these settlers is an economy that has undergone an equally dramatic change in the last ten years: The high-paying aerospace and other defense-related industries-which long dominated Southland, as the
“Though little heralded, manufacturing is the backbone of the Southland economy-one out of five Angelenos works on a production line,” noted Benjamin Mark Cole in the Los Angeles Business Journal. However, this is also a soft spot: Since 1987, LA County has lost over 120,000 manufacturing jobs from a 1980 peak of almost 912,000, mostly in the higher-paying durable goods industries.
Despite the looming presence of such big employers as Lockheed, Rockwell, Northrop, McDonnell Douglas and General Motors, the great majority of Southland’s manufacturing workforce has always been employed by small- to medium-sized companies. Many of these have been adversely affected by the recession and by the decline of defense orders to those big contractors.
But Lockheed’s Chairman and CEO Daniel M. Tellep remains optimistic: “The downsizing of the aerospace industry presents a difficult challenge for the southern
Another powerful player, Atlantic Richfield Chairman and CEO Lodwrick M. Cook, is combat ready. Speaking of the state and city government attitude toward business, he says:
“We are painfully aware that, over the years, our leaders have turned a blind eye to our loss of competitiveness. A `stick-it-to-business’ attitude has been the order of the day in many regulatory and legislative chambers. But we see clear signs of change. The recent report by the governor’s committee on competitiveness, headed by Peter Ueberroth, gives us hope. The alarm bells have sounded, people have heard them, and battle stations are being manned.”
Throughout the area, fewer manufacturing jobs have been lost in nondurable goods industries such as food processing, garments and printing. (The sector’s workforce has declined only 3 percent from a high of 316,000 in 1980 to 306,700 in 1990.) Generally, such jobs do not pay wages that can support the middle-class lifestyle that has long lured Americans to southern
Hampering efforts to patch the economy, observers say, is a lack of cohesive, effective leadership from the business community. “Our current corporate leadership is bland,” claims LA business writer Joel Kotkin. “They might as well be living in a space station for all they know about LA. They contribute to the right charities and they go through the motions, but they basically send their flunkies to do most of the civic work. There’s very little of a passionate business leadership at the center of the city.”
Adds an executive of a civic organization: “Who are the major business figures in LA? There is no good answer because everybody is very low-key. There’s really nobody out there. We have a major power vacuum. Nature may abhor a vacuum, but there’s no one rushing in to fill this one.”
For many years, LA did have effective, if not passionate, business leaders. Pre-eminent among them was the
Simplistic and overstated, perhaps. Nonetheless, the influence of big business at City Hall has waned. And blacks, who comprise 12 percent of LA’s population, hold 30 percent of the positions in its bureaucracy. As for Mayor Bradley, while many critics allow that he was a positive force in his first two terms, the epithets applied to him as he finishes his fourth term, particularly by business leaders, range from “pathetic” to “brain-dead.” The City Council is equally reviled.
In large part, the new political landscape is the product of the shifting demographics. Citing the increasing power of immigrants from
Observers concede that big business efficiently protects its interests at the state level, lobbying
At the local level, Bruce Karatz says the events of April sounded a wake-up call for local CEOs, convincing many that they need to participate in efforts to rebuild the city’s slumping economy.
“Business leadership is crucial at a time like this, when the politicians are overwhelmed with the problems of reconstruction. The recent void of
Among Los Angeles CEOs, perhaps best-known to the public are such entertainment moguls as MCA’s Lew Wasserman, Disney’s Michael Eisner, and Creative Artists’ Michael Ovitz. But
Though LA’s entertainment industry directly employs only about 100,000 workers, it indirectly supports at least 100,000 more and surely produces the city’s most famous products. The recent big studio investments of Sony and Matsushita underline the world’s appetite for
One Hollywood-connected CEO who is also involved in the business of greater LA is Bram Goldsmith, chairman of City National Bank in
Goldsmith believes these thousands of light manufacturers will take up the slack caused by the aerospace decline. That many of these concerns are owned by Chinese, Indian, Thai, Vietnamese, Pakistani, Korean and Hispanic immigrants only highlights the city’s new ethnic fabric.
The new entrepreneurs from
Referring to the Hispanic entrepreneurs’ attitude toward the city as a place to do business, Jack A. Kyser, chief economist for the Economic Development Corp. of
Some CEOs also cite as a reason for optimism the willingness of these newcomers to work for less than top dollar. “As long as there’s a labor force that will accept lower wages, industry will stay here,” says David Kirschner, the head of Ted Turner’s Hanna-Barbera movie studio.
But others, like business writer Kotkin, want a new order. “The people who are the city’s solution aren’t being asked to solve its problems,” he says.
In February, Kotkin and others organized a conference called “The Next LA Economy.” The participants were somewhat different from those who usually attend such gatherings-a third were Hispanic or nonwhite, chief executives of the new breed. The conference’s speakers emphasized that the economic future of
“Basically, we’re saying that the old order has failed and we’re bringing new people in,” Kotkin says.
Hyperbole aside, the writer and his colleagues are calling attention to LA’s changing environment. What seems obvious to observers is that the script of urban
THE TRIMMINGS OF TINSELTOWN
If you’re not being taken to lunch at the
While Ronald Reagan dines lavishly with
Just across the grass-grown railroad tracks alongside the BHH, a branch of