End of the line: manufacturers move from assembly to design work.

NOEMI Prado is the new face Of manufacturing in Los Angeles.

As general manager of Southwest Molding Inc., she watched the Sun Valley house frame molding maker founder for years from low-cost Chinese competition--so much so the owners planned to close it.

But despite annual losses nearing $3 million, Prado bought the company earlier this year. She thought she had a better idea.

Prado got out of the commodity end of the business and focused exclusively on custom moldings. In the process, 10 of the company's 60 employees were let go, but now she said the business is prospering.

"Making general moldings, that could be done much more cheaply in China. But custom moldings, that's very specialized," she said. "Each set of moldings has to be individually designed and then manufactured to those specifications."

The wrenching changes at Southwest Molding are emblematic of the new manufacturing picture in Los Angeles. The assembly lines making standardized products that defined manufacturing during the post World War II era--the auto assembly plants and the machine tool shops--have almost disappeared now that the work is done almost entirely in lower cost countries or states.

Instead, local manufacturers are picking niches. Many L.A. operations specialize in front-end design and prototyping, farming out the mass-production to other locations. Other companies, like Southwest Molding, have moved toward customized products. Still others focus on quick turnaround products or servicing, taking advantage of customer proximity.

It's a sweeping transformation that was highlighted in a study released this month by UCLA's Anderson Forecast, which documented the huge decline in manufacturing employment in Los Angeles County and its transformation to a niche sector.

Manufacturing jobs peaked countywide in 1987 at nearly 1 million, and since then, the number has been sliced in half to about 465,000, the report states. Along the way, manufacturing, which comprised 26 percent of the county employment in 1969, slid in prominence, now making up just 11 percent.

Report author and economist Jerry Nickelsburg said the one defining characteristic of the new manufacturing scene in L.A. is the presence of "knowledge workers," skilled employees who inject the latest technology or marketplace trends into the manufacturing process.

Of course, as this transformation has swept through industries, there have been winners and losers. Among the winners: a select few engineers, technology consultants, highly-skilled craftsmen and creative consultants; the biggest losers have been the tens of thousands of low-skilled assembly line workers who have seen their jobs go to lower-cost locales.

"Those products that require a design/knowledge industry already here, those jobs tend to stay," said Nickelsburg. "For other products where we don't have a knowledge community here or not much design/knowledge input is required, there's no comparative advantage to locating here, so those jobs have gone elsewhere."

Aerospace

A huge part of that decline has taken place in the aerospace industry, which has seen direct employment fall from 220,000 in 1990 to about 75,000 today, according to the study. While a major factor in this decline was the plunge in defense Shapes of Thin orders as the Cold War ended, the shifting of manufacturing to other lower cost states has also played a significant role. The only aircraft still manufactured here is the C-17 military cargo plane, and even that is slated to end as early as 2009.

What manufacturing is left is in large part dominated by the knowledge workers described in the UCLA report. Consider Los Angeles-based Northrop Grumman Corp.'s Global Hawk unmanned military surveillance aircraft. Research and design work for the aircraft is mostly done at a lab in Rancho Bernardo near San Diego, while the fuselage assembly is done at a newly-built Northrop plant in Moss Point, Miss. The wings are made at a plant in Texas. But all the components are shipped back for final assembly in Palmdale.

"The decision to move the fuselage assembly work to Mississippi came from an effort to reduce costs," said Ed Walby, director of business development for Northrop's Global Hawk program.

But the final assembly and wiring work needed to remain in L.A. County because of the Palmdale facility's proximity to U.S. Air Force testing grounds on the Rogers Dry Lake Bed, about 20 miles northeast of Palmdale. Walby said flight test work involves using multiple sensors to make sure all the components are functioning as specified.

A similar trend can be found in the consumer goods sector. This holiday season, flat-panel televisions are all the rage. One company moving to take advantage of this is City of Industry-based International Ally Inc., which sells the line of Visco liquid crystal display flat panels to Wal-Mart Stores Inc.

International Ally engineers designed the Visco television at its City of Industry facility; the manufacturing was farmed out to the biggest flat-panel maker in Taiwan. The flat panels are then shipped back to the City of Industry for finishing touches. "All the flat panel companies are doing this now because of the intense demand," said Matthew Mills, International Ally's president and chief executive.

Mills also has built up a business servicing flat panel screens for other brands with a cadre of highly-skilled technicians who basically take apart, fix, then reassemble the screens. "These screens are way too big to ship back to Taiwan when something goes wrong," he said.

Sun Valley medical identification band maker Precision Dynamics Corp. has straddled the line between high-tech local manufacturing and cheaper outsourcing in Tijuana for its more price-sensitive products.

About 20 percent of Precision's products--mostly human-readable identification armbands for hospitals--are made at Precision's Tijuana plant, which opened in 2003. But the more complex identification tags that need to be read by machines (using barcodes and radio frequency identification, or RFID, technology) are made at Precision's Sun Valley plant.

Design shops

The transformation of the local auto industry is an example of the importance of the traditional knowledge job of engineering, as well as an area of newer importance: design.

Taking advantage of the car culture that defines Southern California, many of the major automakers have their design shops here, even though the last automobile assembly plant--General Motors' facility in Van Nuys--closed in 1992.

A recent study from the Los Angeles County Economic Development Corp. found that 12 research, design and development shops have taken root in Southern California. Among these are General Motors, BMW, Mercedes-Benz, Mazda, Isuzu and Hyundai. In addition, Honda is opening an advanced design studio in Pasadena in the next few months, while Acura--Honda's luxury vehicle line--is opening its own design shop in Torrance early next year.

By HOWARD FINE

Staff Reporter