Exports glint amid gloomy outlook for manufacturing companies.

Exports glint amid gloomy outlook for manufacturing companies

Prospects are mixed in 1991 for local factories, with the aerospace, apparel and furniture industries facing troubles, but export markets looking better for a variety of manufacturers.

The Southland is the nation's premier manufacturing center, with more than one in five workers in Los Angeles County employed on production lines, or about 857,000. By comparison, the No. 2-ranked Chicago area has only about 560,000 industrial workers.

Manufacturing is even more important economically to Southlanders than suggested by the raw employment numbers: Most economists credit every manufacturing job with creating two to three jobs in collateral industries, such as warehousing, trucking, administration and advertising.

Moreover, factories are a regional cash magnet.

"Manufacturing is an activity that draws money into our economy," said Jack Kyser, economist with the Los Angeles Area Chamber of Commerce. "When factories here sell goods, money from elsewhere enters into our business sphere."

However, except for some promising flashes of light on the export front, the manufacturing outlook is gloomy.

In aerospace, where 250,000 are employed, the federal budget axe is expected to slow down production and erode profits. "Defense industry fundamentals have deteriorated," said Robert Skinkle, economist with Wells Fargo bank. "Employment is down, cash flows have weakened and profit margins are shrinking." The Southland defense industry will consolidate, said Skinkle, but the transition to a leaner industry "is going to be a difficult one."

In apparel and textiles, the region's second-largest manufacturing activity with about 100,000 employees, 1991 is expected to be soft.

"Last year was a difficult year in apparel, perhaps the most difficult in the last dozen, and I expect 1991 will turn out much the same," said Bruce Corwin, regional vice president at Union Bank in the downtown Los Angeles garment district. "There are some positive aspects. Retailers have kept their inventories low, so they will need to order, and `street wear,' a type of casual clothing, is selling well."

But the apparel industry parallels the national economy, said Corwin, "so if we pull out of the recession in the last half of 1991, the apparel industry will brighten too."

The year also is expected to be tough for furniture manufacturers, which employ about 80,000.

In furniture, there are complaints about air quality and workers' compensation costs, but hope that Japan can become a new and major market.

"The cost of compliance with air quality regulations, the cost of the workers compensation system, and the general slowdown of the economy will hurt the furniture industry in 1991," said Les Riddell, executive vice president of the Western Furnishings Manufacturers Association in Santa Fe Springs. "But as a trade group, we are making progress in opening up Japan as a market."

A furniture industry official said that unlike previous flops of campaigns touting that "Japan is getting ready to buy," this time there are Japanese distributors eager for American product, which is less costly than that made in Japan.

"We are absolutely confident that they are going to start buying furniture," said Stephen Wise, chairman of the Export Council of the Western Furnishings Manufacturers Association and president of Los Angeles-based Furniture Profiles, a manufacturer. "We are making a breakthrough, and they are changing their distribution system to buy our furniture."

Los Angeles furniture manufacturers, by temperament and geography, are well-suited to make goods for Japan, said Wise. "Local furniture manufacturers tend to make furniture in smaller batches than the furniture manufacturers in the East or the South," said Wise. "So we can adapt our production to Japanese tastes. And, being on the Pacific, Japan is a natural export market."

Wise, who visited Japan twice in 1990 and is bringing a Japanese trade delegation to California in July, cautions U.S. manufacturers to tailor their product to Japanese tastes in texture, color and size. "You cannot sell large, Southwestern-style furniture to Japan," he said. "You need to downsize the furniture, and use the right materials."

But the Japanese are fascinated by California style, so manufacturers need not try to produce Japanese-type furniture, but only to make stylish furniture appropriate to Japanese sensibilities, said Wise. "The Japanese love California and the California lifestyle," he said. "There are retail districts in Japan which are very similar to Melrose Avenue."

And the Japanese market can be penetrated, attests one Southland manufacturer in another industry. Gene Gleason, president, chief executive and chairman of Micro Surface Engineering Co. in Los Angeles, reports his firm already sells 40 percent of his product to Japan. He makes makes custom balls of all types for industrial use, including high-specification metal ones and silicon, ceramic and plastic balls -- some manufactured to tolerances in the millionths of an inch.

"If the domestic manufacturer doesn't diversify, doesn't seek overseas markets, it is difficult to see how it is going to survive," said Gleason, soon to enter his fourth decade in the manufacturing business. "We have seen our domestic market just shrink and shrink."

Gleason visited Japan in 1990, taking every opportunity to meet potential buyers, an expenditure of time, effort and money he said was worthwhile.

Gleason's selling point? "Not so much price, but service," he said. "We recently filled a Japanese order for 1.5 million balls in 10 days, instead of the eight weeks considered normal for such a large order. We turn around orders more quickly than anyone else in the business."

Gleason advises Southland manufacturers in 1991 "to start developing a niche. You have to find international niche markets for your products, and then service those markets."

PHOTO : Worker at the Chair Factory: L.A. furniture manufacturers claim Japan is ready to buy