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LOS ANGELES COUNTY AEROSPACE WORKERS LOSE ESTIMATED $1.8 BILLION IN PERSONAL INCOME DURING 1991-1992

 Industry Remains Under Duress, But Conversion
 Efforts Can Yield Significant Benefits
 SACRAMENTO, Calif., Jan. 14 /PRNewswire/ -- "As of October 1992, 108,100 aerospace jobs have been lost in the five-county area since January 1988," stated Rohit K. Shukla, director of Aerospace & High Technology Business for the Economic Development Corporation of Los Angeles County (EDC), while testifying today before the Senate Budget Committee.
 Citing from a newly released study by the EDC, Shukla continued, "In addition, 85.0 percent of the aerospace jobs lost in Los Angeles County had average hourly earnings of $17 or more, and it is estimated that due to the decline in aerospace employment in the county, $918 million in personal income was lost in 1991, and another $926 million will be lost in 1992.
 "Californians of all political stripes feel the need for a new public-private partnership," Shukla observed, "and this partnership should be focused on repealing the adversarial relationship between business and government, on attracting a considerable share of the federal funding available for defense transition activities, on creating tax incentives and providing regulatory relief for small to medium-sized companies engaged in conversion or redeployment into new markets (other than defense)."
 Assisted by a grant from the U.S. EDA, the EDC has been actively involved in assisting companies in the process of technology transfer and defense conversion activities. Shukla continued, "We cannot operate in isolation, however, and are willing to work with the state in building a program for all of California. I am here today to strongly urge the Senate Budget Committee to adopt the following recommendations:
 -- Provide for central, coordinated information and planning for conversion activities targeting the $1.7 billion in defense budget funding appropriated in California for fiscal 1993-1994. Appoint a "conversion czar," much like other states are considering;
 -- Create immediate tax incentives and regulatory relief for companies pursuing conversion and transitioning into commercial markets;
 -- Develop a more integrated approach and framework for state matching funds for projects funded under the defense conversion programs in the defense budget; and
 -- Work urgently on developing a more receptive business climate.
 "The opportunity is at hand for California to be, once again, on the cutting edge of change, not for the sake of change, but for the sake of blazing an exciting future. The strengths which set us apart -- our population, our entrepreneurs and our optimism, should be allowed to find full voice again," Shukla concluded.
 Also testifying at today's hearing was EDC Board member Madeline Pedego, owner of a small defense electronics company which is in the conversion process. Pedego urged immediate action on a host of disabling problems which hurt small business the hardest. While her company had faced a crisis of survival compounded by problems with workers' compensation, she remains committed to California. "We need to fight hard to get the dream back on track," she urged, adding that lawmakers should "level the playing fields for small business to do what it does best: creating jobs and investing in communities."
 The EDC is a private, not-for-profit organization dedicated to providing pro-active leadership and programs that accelerate the process of economic recovery in Southern California.
 Aerospace/High-Technology Industry Employment Trends and Impacts
 The cuts in defense spending, plus weakness in certain commercial markets, have had a significant impact on aerospace/high-tech employment in the Los Angeles area, and these impacts have quickly filtered through to the overall economy. The area is still in "recession" (i.e., employment is declining and personal income growth is weak), with a modest recovery expected in 1994.
 As of October 1992, the latest data available at the county level, 108,100 aerospace jobs have been lost in the five-county area since January 1988 (because of revisions in SIC codes, the current data series starts as of this date). This represents 79.8 percent of the total aerospace job loss in California.
 Besides jobs, there are other aspects to consider. For example, 85.0 percent of the aerospace jobs lost in Los Angeles County had average hourly earnings of $17 or more. It is estimated that because of the decline in aerospace employment in the county, $918 million in personal income was lost in 1991, and that another $926 million will be lost in 1992. Not only is personal income tax revenue for the state lost, but retail sales tax revenue as well.
 Office and industrial space usage in aerospace is being cut as well, and this has implications for the construction and real estate industry, which is already burdened with excess inventory. For example, as of September 1992, the industrial vacancy rate in Southern California was 11.3 percent. In the case of older industrial facilities, recycling for new uses may be a problem because of environmental regulations.
 Forecasts have been made of aerospace job losses through 1995 in both the five-county area and the state. One indicator used was announced aerospace layoffs. As can be seen, 21,500 layoffs were announced during 1992, with these layoffs slated to occur over a 12- to 18-month period. Moreover, in 1994-1995, the B-2 program will peak and start to wind down. As a result, significant job losses in aerospace in the five-county area should continue through 1995.
 Therefore, it is essential that a defense conversion/technology transfer strategy be pursued aggressively for both the state and the Los Angeles area. Such a process will be difficult but is imperative to capture the many potential business opportunities that exist, help displaced aerospace workers find new jobs, and also help boost both the California and Los Angeles area economies.
 -- Jack Kyser, chief economist, EDC
 AEROSPACE/HIGH-TECHNOLOGY EMPLOYMENT TRENDS
 Riverside-
 Los San Ber-
 Angeles Orange nardino Ventura Total 5-
 County County Area County County Area Calif.
 Jan. 1988(A) 284.2 90.7 15.4 13.6 403.9 717.2
 Oct. 1992 200.3 73.9 11.5 10.1 295.8 581.8
 Job Loss -83.9 -16.8 -3.9 -3.5 -108.1 -135.4
 (A) Because of a revision in SIC codes, the current data series starts this date.
 Source: California Employment Development Department.


DISTRIBUTION OF AEROSPACE/HIGH-TECH JOB LOSS IN LOS ANGELES COUNTY
 (Based in 1987 SIC codes)
 (In 000s)
 Average
 Jan. Oct. Job Hourly
 1988 1992 Loss Earnings(B)
 Direct Aerospace:
 Computer & office eqpt. 13.6 11.5 -2.1 $12.04
 Communications eqpt. 5.3 4.6 -0.7 17.72
 Electronic components 27.3 19.5 -7.8 12.03
 Aircraft and parts 124.1 94.1 -30.0 18.53
 Guided missiles/
 space vehicles 18.9 9.5 -9.4 17.97
 Search & nav. instruments 80.3 49.0 -31.3 17.44
 Measuring & controlling
 instruments 14.8 12.1 -2.7 10.76
 Total -84.0
 Indirect Aerospace(A)
 Non-ferrous rolling 4.9 3.1 -1.8 $10.72
 Non-ferrous (castings) 7.7 5.5 -2.2 11.13
 Metal working machinery 10.9 8.3 -2.6 14.22
 Total -6.6
 (A) Industries with a significant portion of sales to aerospace firms.
 (B) As of October 1992.
 Source: California Employment Development Department.
 LAYOFFS ANNOUNCED BY MAJOR AEROSPACE FIRMS
 IN THE LOS ANGELES FIVE-COUNTY AREA
 (Each Listing Represents a Separate Layoff Announcement.
 Layoffs Normally Take Place Over an 18-Month Period.)
 1990:
 Douglas Aircraft 8,000
 Northrop 3,000
 Litton 600
 Lockheed 4,000
 General Dynamics 1,500
 TRW 500
 Total 17,600
 1991:
 Hughes 500
 McDonnell Douglas 450
 Douglas Aircraft 1,000
 Northrop 600
 Rockwell 450
 Douglas Aircraft 3,800
 Total 6,800
 1992:
 Rockwell 1,000
 Northrop 1,500
 Northrop 1,000
 Douglas Aircraft 2,000
 Hughes 6,000
 Douglas Aircraft 5,000
 Hughes (GD Missiles) 1,500
 Abex Aerospace/Oxnard 550
 Spy Satellite Operation 800
 McDonnell Douglas Aerospace 250
 Teledyne Systems 232
 TRW (year-end announcement) 1,600(A)
 Teledyne/Sprague 70(B)
 Total 21,502
 (A) Year-end announcement; an additional 1,700 jobs cut through attrition.
 (B) Announcement in early 1993.
 Source: News media reports and company verification.
 AEROSPACE/HIGH-TECH EMPLOYMENT TRENDS
 AND FORECASTS -- CALIFORNIA AND SOUTHERN CALIFORNIA
 Southern California
 Riverside-
 San Bernar- Ventura Total
 Calif. L.A. Co. Orange Co. dino Cos. Cos. 5-Cos.
 Actual
 1988 725,500 281,000 92,400 16,000 13,200 402,600
 1989 718,000 272,400 87,600 15,000 12,200 387,200
 1990 695,900 260,500 84,100 14,100 11,500 370,200
 1991 656,100 234,800 79,900 13,500 11,500 339,700
 1992 est 604,500 209,200 75,000 12,000 10,000 306,200
 Forecast
 1993 563,500 185,200 70,200 10,500 9,500 275,400
 1994 528,500 163,200 65,700 9,500 9,000 247,400
 1995 494,500 139,200 61,700 9,000 8,600 218,500
 Source: 1988 to 1991, California Employment Development Department; 1992 estimate by the EDC based on EDD data; 1993-1995 forecasts by the EDC.
 -0- 1/14/93
 /EDITOR'S NOTE: Full copies of study available at Economic Development Corporation of Los Angeles County. Contact Jack A. Kyser, 213-462-5111/
 /CONTACT: Rohit K. Shukla, director of Aerospace & High Technology Business for the EDC, or Jack A. Kyser, chief economist of the EDC, 213-462-5111/


CO: Economic Development Corporation of Los Angeles County ST: California IN: ARO SU: PER

BP-LS -- LA042 -- 5123 01/14/93 18:18 EST
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