Aerospace remains in crash mode as job losses mount.

New year predictions ring true as employment lags

Before the bells even rang in the New Year a year ago, Los Angeles County employment had already atrophied 5.2 percent, from an annual average of 4.25 million workers in 1990 down to 4.04 million for the annual average in 1991, according to statistics from the state Employment Development Department.

Further economic hits to the county during 1992 took away even more jobs by the latter months of year. By October, total employment had dipped to 3.92 million, a 2.7 percent decrease from October 1991.

Economic predictions at the outset of 1992 called for a loss of 0.1 percent for the year. By October, there had been a loss of close to 3 percent in total employment, from October 1991.

Bearing most of the burden for the spiraling numbers was the durable goods manufacturing industry and the high-tech aerospace and defense sector, the now-crumbling building blocks for the county's economy. Sure enough, EDD labor market analyst Jay Horowitz blamed manufacturing and high tech for 1992's biggest employment losses.

By October, employment in the manufacturing sector had slipped to 735,600 from the year-before mark of 787,700. Employment there reached its pinnacle in August 1990, when the employed manufacturing work force reached 856,500.

"Aerospace is literally hemorrhaging," grieved Jack Kyser, chief economist at the county Economic Development Corp.

"About 80 percent of the aerospace jobs pay $15-$18 per hour," he pointed out. Losing these jobs "is a tremendous hit to our economy," Kyser said.

Kyser also stressed the "ripple effect" which has been felt with the loss of manufacturing jobs. The manufacturing sector's so-called "multiplier effect" means that for every one job created in manufacturing three jobs are created in service industries. And vice versa, for manufacturing jobs lost.

The construction industry, which posted employment stats of 117,600 in October, also was in dire straits over the course of the year, though reports from the Construction Industry Research Board cited 1991 as faring worse than this past year.

According to Ben Bartolotto, research director, the biggest problem in 1992 for construction employment was the "reduction in demand and the risk of job loss."

Further, he said that "the credit crunch has affected the magnitude of the decline. It made it worse."

He noted that in residential building, employment "is continuing to decline." That sector in Los Angeles County "is down about 5 percent so far this year," he said. Obviously, the effect on employment "is negative," he noted.

For the year, about $2.6 billion worth of single-family and multi-unit dwellings were constructed, down 62 percent from 1989's total of $6.84 billion. In commercial building, $1.95 billion was constructed in 1992, down from the $5.1 billion in 1988.

In March, the EDD rebenchmarking of its data threw a monkey wrench into the county's economic machine, revealing that a staggering 189,600 jobs disappeared and had been unaccounted for during 1991. This revision brought the total work force figure down to 3.95 million.

A bright spot for 1992 was the international trade sector, which is not expressly defined in the EDD numbers. But, based on trade volume, economist Kyser set the employment in trade-related fields at 307,600 for the region for the year, up about 16,000 from 1991.

Born of the April riots was the Peter Ueberroth-led Rebuild L.A. with a mission to carry the flag for the redevelopment of the riot-torn areas and take charge of job creation.

According to Rebuild L.A. spokesman Fred McFarlane, "We will work to create 54,000 jobs in the next four years."

McFarlane said that with the initial establishment of the organization done, the most important areas for job creation in Los Angeles County are "financial, insurance, education, retail and philanthropy." As of December, McFarlane said the group had not yet established the parameters for manufacturing growth. "Nobody has figured out how to retrofit the defense industry for jobs," he said.

The double whammy of the April riots and June earthquakes further tarnished the already blemished reputation of the city.

At the time, these events threatened to hamper the tourism industry, which had continually let people go due to strapped hotel finances and a decrease in tourist activity.

Also the retail industry suffered throughout the year in terms of employment, which was tied to the dismal performance of retail sales. "Overall that industry is down about 1,000 jobs," noted Kyser.

He defined the retail sector as "a major disaster area, almost as bad as aerospace." Riddled by bankruptcies, consolidations and shutdowns, retail outlets employed 3.4 percent fewer people in October than in October 1991.

Holding its own was the services sector, which traditionally swells when goods producing jobs are lost. Up to a 1.19 million-person work force by October, that industry did experience a slight decline in the advertising submarket.

From an executive search point of view, 1992 saw the squeeze put on the middle management ranks. According to Peter Kelly, managing vice president and head of the downtown office for Korn/Ferry International, "that's been the most impacted segment" throughout the economy.

But he was seeing hints of a trend reversal by the close of 1992 as "across the board all industries except for real estate are interested in replacing middle management and senior positions. This is beginning to indicate a turnaround," he predicted.

As a gauge of those out of work, the rolls of unemployment insurance were up toward the end of 1992. Though EDD officials had no year-to-date dollar figures for L.A. County, department officials in Sacramento estimated that $3.8 billion would be paid out in unemployment insurance for all of 1992 in the state.

For Los Angeles County in the first nine months of the year, $776 million was paid out in unemployment insurance benefits compared to the state-wide figure of $2.98 billion for the same time period.