10 Questions…on Manufacturing’s Key Role in L.A. with Jack Kyser
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t may not be glitz and glamour, but Jack Kyser, the chief economist for the Los Angeles Economic Development Corporation, says that manufacturing plays a crucial role in the South Bay’s economy that few recognize.

How big is manufacturing in Los Angeles?

Despite some pretty significant job losses, Los Angeles County is the nation’s largest metro area for employment in manufacturing. If you look at the six Southern California counties from here to San Diego County combined, you have more than 930,000 people working in manufacturing – that makes it the largest manufacturing center in the entire country. People have no clue that it’s that big – they think manufacturing and think that it’s all in small towns in Middle America. 

Why do you think it is so overlooked?
Most of these companies are small to medium-sized with 20 to 250 employees, so we’ve found that a lot of them don’t do a good job of getting out into the community to make people aware that they are there. But probably the biggest reason is that it’s not sexy like the entertainment industry. As a society, we tend to focus on things that are more exciting, but something mundane like manufacturing is crucial to this area.  

Why is it so crucial?
When you’re talking about almost a million jobs, that’s a major chunk of your work force and these are generally well paying jobs. If you took away manufacturing and its jobs and then asked what these people would be doing and where would they find their income, such a loss would have major implications for our entire economy. 

I hear manufacturing and think low-paying labor jobs. Are there any opportunities for college grads?
While manufacturing certainly offers a lot of opportunities for those with a high school education to make a decent middle-class living, there are lots of opportunities for college graduates as well. You have production planning, sales, marketing, logistics, finance, and for the largest middle-market firms, there’s a lot of government regulations with which to deal. Also, public relations work to get out in the community so that the company’s story is told.
 

What kind of manufacturing are we talking about here in this area?
The top four industries by employment in this area are international trade, tourism, motion picture and television, and aerospace technology in that order. Manufacturing is involved in each of those. Basically, the only thing we don’t do here is cars and steel work. But we’ve got the high-tech aerospace firms in El Segundo and Redondo Beach areas, computer and electronic products, transportation equipment, fabricated metal products. The absolute largest in L.A. County, though, is apparel, despite some significant job losses.  

Why have so many apparel jobs been lost?
Low cost competition overseas from China and other Asian nations, and Mexico and Central America as well.  

There’s so much on the news today about jobs moving offshore. Won’t this continue and diminish our manufacturing industry here?
We certainly have a lot of competition from overseas, but you have to understand we can do a lot of things extremely well here that others can’t, and the cost of production is not the major issue.  

Cost of production is not the major issue?
No, there are a number of other factors that always have to be balanced out by companies – what you’re producing, port congestion, lag time in shipments. All of that can lead to additional costs that offset cheaper production abroad. Plus, like I said, we can do things here that can’t be done abroad. Say, for example, a retailer is selling a certain type of apparel really quickly. They need to restock immediately – they can’t wait for it to sit in a container for four weeks, they need it now. We provide those “quick-turn” goods, plus we can ship anywhere in the world so quickly with the ports and LAX so close. And we understand domestic goods – the classic example was a ship full of Nike sweatshirts that came from Asia with the Nike swoosh on backwards. 

You say we have a lot of RCCs – Retail Crazed Cities – here in Southern California. What’s the problem there?
A lot of our cities would like to see any piece of land used for retail rather than manufacturing because they’re looking at the potential sales tax dollars. But what they don’t look at is that you need people to have jobs to spend the money. So a prime spot for a light industrial park gets turned into a foundering retail development. The industrial park would not only generate good jobs, but point-of-sale tax dollars and a better quality of life for residents. 

How does an industrial park do all of this?
The city of Vernon is a good example. They have a pretty tidy manufacturing labor force, but little retail. The workers turn around and spend in adjacent communities. In the meantime, Vernon generates tax revenue off of more than $374 million in non-retail sales.

 

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