Sky's the limit for transformed aerospace sector.

Call it the quiet boom.

While the recent real estate frenzy has grabbed the headlines, Southern California's aerospace sector has shaken off the effects of the collapse of the early 1990s and is now in healthy shape, according to a report released last week as part of the University of California Los Angeles Anderson Forecast.

But today's aerospace landscape is markedly different than it was 20 years ago. Southern California is no longer a center for final aircraft assembly. Instead, legions of subcontractors and highly specialized research and development operations have taken center stage.

"The sense that many people have had is that aerospace in Southern California was in terminal decline. But what's really happened is that it has transformed," said Jerry Nickelsburg, economist with the UCLA Anderson Forecast.

Gone--or almost gone--are the aircraft assembly operations of Douglas Aircraft and Hughes Aircraft, which have either been swallowed up by out-of-state aerospace contractors or have been completely shut down. Only Boeing Co.'s C-17 plant in Long Beach remains, and that is slated to close as early as 2009.

Meanwhile, thousands of smaller firms have managed to thrive, supplying parts to aircraft contractors and also providing research and development expertise. In Los Angeles County alone, 632 companies make components or provide research and development services for the C-17 military transport aircraft, making everything from guidance systems to wing components, according to Boeing records.

"We've moved from an industry dominated by final assembly to one that is dominated by the technological development of the aircraft," Nickelsburg said.

As a result, aerospace employment in Southern California, which in 1990 stood at 220,000 and plunged to a record low 75,000 in 2003, has stabilized at 75,000 jobs to 78,000 jobs since then.

In a broader context, this has helped trim the hemorrhaging in the manufacturing sector. For example, between August 2005 and August 2006, manufacturing employment in L.A. County fell by 2,800 jobs, or 0.6 percent, a far cry from earlier in the decade when up to 35,000 manufacturing jobs were being lost each year.

And this in turn has helped keep the broader economy from falling into recession as the real estate/construction sector begins to tank according to the Anderson forecast.

What's more, Nickelsburg said he expects this trend to continue, despite the announced closure of the C-17 plant and the recent bypassing of Los Angeles-based Northrop Grumman Corp. for several multibillion dollar federal government contracts, including development of the next-generation space vehicle and border security technology.

"Even though aerospace companies not based in Los Angeles are receiving these contracts, there is much more teaming up among contractors. Also, while the lead contractor may not be based here, an awful lot of work will still be done here by subcontractors, especially where the work requires engineers and scientists," Nickelsburg said. "That is this region's enduring strength."

By Howard Fine 

Staff Reporter