Panel discusses future of South Bay aerospace industry

Assemblymen Rocky Chavez and Al Muratsuchi talk sequestration and its impact on aerospace. Photo by Rachel Reeves
Assemblymen Rocky Chavez and Al Muratsuchi talk sequestration and its impact on aerospace last May. Photo
Assemblymen Rocky Chavez and Al Muratsuchi talk sequestration and its impact on aerospace. Photo

Assemblymen Rocky Chavez and Al Muratsuchi talk sequestration and its impact on aerospace. Photo

Aerospace, one of the linchpins of the South Bay economy, faces mounting financial pressure owing to federal budget cuts and the ever-present threat of the potential closure of the El Segundo-based Los Angeles Air Force Base.

Assemblymember Al Muratsuchi convened a public panel discussion May 17 to discuss the implications of sequestration – the buzzword for $85 billion in federal budget cuts – for an industry that employs 60,000 people in Los Angeles County alone.

The South Bay is home to the Los Angeles Air Force Base (LAAFB) and to Northrop Grumman, Alcoa Fastening Systems, Boeing, Lockheed Martin, and DirecTV, plus myriad small firms that supply them. Raytheon, which for years has been headquartered in El Segundo, recently announced its intention to move to Texas.

“We are here because we are very much concerned about the looming defense cuts and the impact on the South Bay economy, on the South Bay aerospace industries, on the South Bay military community,” Muratsuchi began the discussion.

“It was just last week that we all saw the news about Raytheon moving its headquarters to Texas and this clearly is just the latest development in what appears to be a long-term trend in terms of aerospace jobs moving out of not only the South Bay but the state of California.”

Presiding on the panel alongside him were Assemblyman Rocky Chavez of the 76th District, Torrance councilman Gene Barnett, John Parsons of the South Bay Workforce Investment Board, former aerospace employee and activist Michael Jackson, and Los Angeles County Economic Development Corporation (LAEDC) economist Kimberly Ritter-Martinez.

Ritter-Martinez explained that the South Bay became Southern California’s aerospace capital in the 1980s and 1990s, and for several reasons: the weather and location appealed to highly skilled, highly paid workers; its proximity to research institutions; and an existing well-developed electronics industry.

At the height of the Cold War, in fact, one in 10 aerospace jobs were in L.A. County.

Employment in aerospace has shrunk by half since the Cold War, thanks to Department of Defense budget cuts, economic contraction, and technological advancement – or the trend whereby “machines are replacing people,” Ritter-Martinez said.

Parsons added that other states are vying for the attention of major aerospace companies, offering them tax breaks and other appealing incentives, and that California has yet to catch up by proactively enticing large firms to maintain their West Coast presence.

“We compete with other people, whether Texas or Nevada or Florida or somewhere in the upper Midwest – when they’re trying to attract workers, they’ve got to do a sales pitch. They’re throwing money in and all sorts of incentives and its like we’re going to wait until horse is out of the barn until we do something about it and I think that’s going to be the case,” he said.

Parsons, a former Redondo Beach councilman who spearheaded efforts to keep the LAAFB off the Base Realignment and Closures (BRAC) list in 1991, 1993, 1995, and 2005, explained the importance of continuing to lobby against the possibility of LAAFB winding up on that list.

Parsons and his team raised $1 million and lobbied successfully in Sacramento and Washington, D.C. to keep LAAFB off the list in 2005, and continue to track BRAC developments.

One South Bay local, who has lobbied alongside Parsons to keep LAAFB off the BRAC list, approached the podium at the forum discussion.

“My impression of the state of California is California doesn’t care,” he said. “They haven’t established the right kind of policies to keep that infrastructure here and if it keeps deteriorating the case to keep LAAFB open will deteriorate with it.”

Ritter-Martinez responded that several factors are pushing aerospace companies out of California, including a high cost of doing business and the recent tendency for larger firms to consolidate and move closer to their primary customer – the Department of Defense – and their manufacturers.

She suggested California think about offeringtax credits to businesses that hire or capital expenditure tax incentives to keep companies, and therefore jobs, here.

“We have a lot to do in terms of improving California’s business climate,” Muratsuchi chimed in.

Ritter-Martinez suggested the government more actively seek to make connections with aerospace companies.

“Part of why aerospace grew up here and part of its strength is the close collaboration it had with not only government but also universities and educational institutions, so going back to the question of having enough STEM(science, technology, engineering, mathematics) workers to supply the industry… There are so many stakeholders involved in the growth and evolution of that industry so you have to get government and industry and educational institutions and smaller firms to work together,” she said.

One member of the public asked whether it made sense for aerospace firms to go the commercial route in the face of increasing financial pressures.

Parsons responded with a no.

“In 1992 we went through what we called the peace dividend,” he explained. “We decided to cut back on defense spending because the Cold War was won and wars are winding down and we didn’t need military spending anymore so there was a big effort to try and encourage the defense industry to take their technology and go commercial with it, and with a few exceptions it was almost a complete and utter failure.

“It’s like trying to find an aerospace company and teach them how to make lawn chairs. They’re not going be good at that. They’re good at what they do.”

Chavez concurred.

He added that there is no peace dividend at the end of this 12-year war, partly owing to the absence of a draft.

“If everybody would’ve had their young daughters and sons involved in this or would’ve been paying taxes for this, we wouldn’t have been at war for 12 years. It would’ve been over in 18 months. There’s no dividend.”

Patricia Voss, regional manager for the South Bay at LAEDC, pointed to a need for a collaborative focus group to address the industry’s decline.

Muratsuchi noted he has formed an assembly committee on the aerospace industry, but acknowledged it should have greater ties to “the top” in Sacramento and Washington, D.C.

Jackson tempered the somber conversation with a reference to the industry’s past victories.

“I think this is more a bump in the road than a catastrophe… We’ve been through it before so I think it’s a matter of just riding that wave,” he said.

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