Tài liệu LOS ANGELES COUNTY WORKFORCE PREPARATION AND ECONOMIC DEVELOPMENT COLLABORATIVEMetal ManufacturingIn Los Angeles CountyPart I: An Industry Overview July 1999COMMUNITY DEVELOPMENT TECHNOLOGIES CENTER doc

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In Los Angeles County
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Part I: An Industry Overview

July 1999



About This Report

This report is produced by the Community Development Technologies Center, a regional
nonprofit organization that provides training, applied research and technical assistance
services in community economic development. CDTech is project director for the Los
Angeles Regional Workforce Preparation and Economic Development Collaborative, a
three-year pilot project to help establish an integrated workforce development system for
the county.

The work of the Collaborative is led by a Joint Management Committee made up of
representatives from: the California Workers Assistance Program, AFL-CIO, the
Department of Public Social Services for Los Angeles County, the Employment
Development Department, Los Angeles Area Chamber of Commerce, Los Angeles
County Office of Education, Los Angeles Economic Development Corporation, Los
Angeles/Orange Counties Community Colleges Consortium, and the South Bay Private
Industry Council.

The contents of this report are solely the responsibility of CDTech. For additional
information about this report and the project itself, please call Linda J. Wong at (213)
763-2520, x 235.



1
THE METAL MANUFACTURING INDUSTRY
IN LOS ANGELES COUNTY

AN OVERVIEW


Introduction

This overview of the Los Angeles metalworking industry was commissioned by the Los
Angeles County Workforce Preparation and Economic Development Collaborative (here
after known as the “Collaborative”). The Collaborative is one of six regional projects
established under California’s Regional Workforce Preparation and Economic
Development Act of 1997. The purpose of the legislation is to facilitate the
implementation of a seamless, integrated workforce development system by
strengthening existing partnerships in economic development, employment and training,
welfare reform and school reform. The goal is to improve the content and delivery of
education and workforce development services by aligning these programs with the
training needs of existing and emerging industries.

The Los Angeles Collaborative is addressing this particular goal by developing two
products:

• An Internet search engine () that will connect
different information systems, so that job seekers, employers,
education/training providers and others can easily access information about
jobs, career ladders, and education/training resources; and

• A “skills gap” profile of key occupations in five industries—apparel, food
processing, health services, high tech/electronics and metalwork—so that
identified gaps in skill sets and education curricula can be closed through
industry-led efforts.

This report provides an overview of the metal manufacturing industry in Los Angeles, the
“demand” side of the equation. It examines the characteristics of the industry—its size,
the firms’ ownership structure and product niches and any geographic clustering of firms
in the region. A subsequent report will address their recruitment, hiring, training and
promotion practices, especially among smaller companies.

Additional reports will focus on the “supply” side of the equation—the education and
training infrastructure for this industry. A comprehensive inventory will be developed of
metal manufacturing technology programs offered by high schools, regional occupational
programs, adult education schools, community colleges and others. A narrative report
will accompany this inventory, explaining the major findings from the research and field
interviews. Lastly, a report on best training practices will be prepared. This report will
highlight the characteristics of effective programs that are successful in educating,
training and placing students in jobs in the industry.

2
Definition of Metalworking

Manufacturing in general is defined by the Standard Industrial Classification (SIC)
Manual
1
as the mechanical or chemical transformation of substances or materials into
new products. Metal work is categorized under durable manufacturing and encompasses
the following SIC’s:

SIC: Subsector Description

33 Primary metals Businesses that smelt and refine metals from ore,
pig or scrap. Examples include firms which
manufacture castings, sheets, barbed and

twisted wires; firms that hot roll iron and steel into
basic shapes, such as sheets, strips, rods, bars and
tubing.

34 Fabricated metals Companies that manufacture metal cans, tin ware,
hand tools, cutlery, general hardware; firms that do
electroplating, anodizing and finishing of metal
products; manufacturers that produce stovepipes,
awnings, eaves, etc.

35 Industrial machinery Firms that manufacture engines, turbines, farm
and garden machinery, cranes, industrial trucks
and tractors, industrial machinery, computer
and office equipment, etc.

37 Transportation Businesses that manufacture and/or engage in
equipment research and development of aircraft, aircraft
engines and parts; firms that produce or engage
in research and development of guided missiles,
space vehicles, propulsion units and related parts.

The core of the industry is made up of firms in primary metals, fabricated metal products
and industrial/commercial machinery. However, some economists also include
Transportation Equipment, SIC 37, in the metal work category, because this segment has
manufacturing related to aircraft and aerospace equipment.

While the SIC codes are useful in describing various metalworking processes, they
actually understate the complexity of the industry. Metalworking is very diverse in terms
of products, processes and markets. Firms offer a wide range of goods and services, from

1
The Standard Industrial Classification is the statistical classification standard for all establishment-based
Federal economic statistics categorized by industry. It covers all economic activities and defines industries
in accordance with the composition and structure of the economy. The Office of Management and Budget
is responsible for the publication of the Standard Industrial Classification Reference Guide.


3
raw metal processing to intermediate metal work (for example, sheet metal and metal for
building structures) to finished goods.

The smallest segment of the industry is primary metals refining. This subsector consists
of firms engaged in raw metal processing such as foundries. The larger segments are
fabricated metals and industrial/commercial machinery. Companies in these categories
manufacture components or finished products. Also included are firms which provide
services to the industry, such as heat treating, plating or finishing. They are not true
manufacturers of a product, but rather, members of the supplier network. If the aircraft
and aerospace segments are included in metal work, they would represent the largest
subsectors in terms of total employment.


Characteristics of the Industry in Los Angeles County

Employment gains since the recession. When the recession bottomed out around 1995,
manufacturing in Los Angeles began a slow, steady recovery. For metalworking, the
rebound occurred with:

Fabricated metal products. From an average of 66,700 jobs in 1988, this
subsector lost nearly 21,000 jobs by 1995, a decline of 31 percent. However, there was a
modest rebound in 1998, with the number of jobs increasing to 49,600.

2


Industrial machinery. This segment of metalworking declined from a high of
61,100 jobs in 1988 to a low of 46,300 jobs in 1995. However, it, too, experienced a
slight recovery in 1998, edging up to about 47,400 jobs.
3


Aircraft and related parts. This segment was the hardest hit during the
recession. From a peak of 123,300 jobs in 1990, employment plunged to a low of 62,400
in 1995, representing a loss of over half of the workforce. However, this subsector
bottomed out in 1996 and began a slow upward climb to 65,300 jobs by 1998.
4


Using 1995 as the base-line year for the start of the economic recovery, metal
manufacturing in the county saw a modest rebound of 5 percent in 1998.
5


Firm size and ownership. A 1995 RLA analysis of 50 metalwork firms in the “neglected
areas” of Los Angeles County
6
revealed an industry that is very mature and very
fragmented. The typical firm is a family-owned “job shop” that has been in business for
30 years. It is small, with fewer than 50 employees, and performs custom work for larger
companies. Subsequent research showed that small companies dominate fabricated

2

Manufacturing in Los Angeles, Los Angeles Economic Development Corporation, June 1999, at 8.
3
Ibid at 9.
4
Id at 7-8.
5
Id.
6
The analysis was conducted by Rebuild LA as part of its economic development strategy to form
manufacturing networks. “Neglected” areas are neighborhoods in which the poverty rates exceed 20
percent.

4
metals and industrial machinery manufacturing. Nearly 90 percent of the firms in these
subsectors employ fewer than 50 people. An overview of the industry, based on the
number of firms and employees, is provided in the chart, “Metalwork Industry, Los
Angeles County,” which is found in the Appendix.

At present, the industry is experiencing the competing pressures of consolidation and
fragmentation. At the top tier of prime contractors, a series of mega-mergers has shrunk
the number of major industry players to a handful. Driving these consolidations is the
need to be commercially and globally competitive. To achieve operational efficiencies,
these firms are finding that size and scale are the most expedient ways to reposition
themselves.
7
As these prime contractors consolidate at the top, there has also been a
simultaneous fragmentation, or “externalization” of functions, at the bottom. To reduce
costs and streamline operations, more companies are transferring specific operations to
outside suppliers. What the larger firms keep in-house are the technical and product
development capabilities, while the smaller companies do the actual metalworking.

Unfortunately, this means that subcontractors are vulnerable to industry downturns and
increasing demands from their customers, who can outsource to other suppliers,
especially those in Asia and Europe.
8


The great majority of small metalworking companies are locally owned. This is not
surprising in view of the family-owned nature of the businesses. Many firm owners grew
up in Los Angeles and prefer to stay in the region. Moreover, their dependence on a local
customer base and their heavy investment in equipment and technology make relocation
out of the region cost-prohibitive. However, even though job shop owners and suppliers
live in the region, most influential corporate decision-makers are no longer based in
California.
9


With the globalization of this industry, manufacturing subcontracts will go to those
regions that have the most productive workforces; that is, the ones that have the best
combination of skilled workers, technology and effective management. Historically, the
companies most capable of training and upgrading the skills of their workforce were the
large prime contractors like Hughes, Lockheed, Northrop and McDonnell Douglas. They
had the internal capacity to develop and sustain workforce development programs for
existing employees, new hires or potential job applicants. However, with small firms
dominating the landscape of this industry, new and existing training resources must be
directed to these smaller companies. Without a stronger training infrastructure, small
firms will face tremendous challenges as platform segments decline and the profile of the
industry becomes increasingly high tech.

7
For example, Northrop acquired Grumman in 1994. Lockheed merged with Martin Marietta in 1995 to

become Lockheed Martin. Boeing purchased the space and defense business of Rockwell International in
1996, then merged with McDonnell Douglas in 1997. Raytheon bought Hughes Aircraft in 1997.
8
Beyond Consolidation: A Study of the Continuing Transformation of Aerospace and Defense in Southern
California, A.T. Kearney, Los Angeles Regional Technology Alliance and Los Angeles Economic
Development Corporation, 1998.
9
In terms of aerospace, the only large companies headquartered in Southern California are Northrop and
Litton Industries. Boeing is headquartered in Seattle, Washington and Lockheed Martin in Bethesda,
Maryland.

5
Geographic Concentrations

The largest geographic concentrations of the industry are found in the southeastern
portion of the county, the South Bay, and the city of Los Angeles (mainly in South
Central Los Angeles). (See Appendix for maps of the different segments of metal
working in Los Angeles County.) A detailed analysis of the character of the industry,
broken down by region, is provided in this following section.

Antelope Valley. This region
10
was hard-hit by the downsizing of the defense industry.
In a 1997 telephone survey of local residents, over 12 percent of the respondents were
former aerospace workers who had separated involuntarily from their companies. Out of
this group, nearly half had left aerospace employment before 1990. Another 26 percent
left between 1990 and 1994; and 19 percent left in 1997. Nearly 45 percent of the
aerospace respondents said they left as a result of industry lay-offs. However, recent
aerospace industry data shows a leveling off since 1994 and modest employment gains
since 1995.

11
Of the largest manufacturing firms in the Antelope Valley, the top four are
now aerospace or aircraft companies:

Lockheed Martin Skunk Works 5,500 employees
Northrop-Grumman Corporation 2,735 employees
NASA (civil service and contract) 1,800 employees
Boeing North America 1,000 employees.
12


The Antelope Valley is currently competing for two major projects, which could generate
several thousand new jobs and millions of dollars into the Southern California economy.
The first is the Joint Strike Fighter, which is the next-generation multi-role aircraft being
developed by the U.S. Department of Defense for the armed forces. This is a high
performance stealth weapon system with multiple variants for different users. It is
expected to be the last new U.S. military aircraft to enter major serial production for the
first half of the 21
st
century. The program is now in the “concept demonstration” phase,
which will conclude in 2001. Boeing and Lockheed Martin are the two competing
primary contractors. Both are building their prototypes in Palmdale.
13


The second possible project is VentureStar, a space vehicle representing the next-
generation X-33. Lockheed Martin is developing a prototype at its Palmdale Skunk
Works facility. If the project stays in Palmdale, it could generate about 2,500 direct jobs
for the launch and manufacturing facilities. Additional jobs would be created for the
payload processing facility, engine manufacturing, communications facilities, service

companies providing fuel and other support, military support personnel and the tourism
and hospitality industries. However, Lockheed Martin has not yet decided where the

10
Antelope Valley encompasses the Mojave Desert region, which includes Kern and Los Angeles counties.
This region extends from Acton to Ridgecrest, and from the San Bernardino county line on the east to
Interstate 5 on the west.
11
1997 Antelope Valley Labor Base Analysis, Alfred Gobar Associates, October 1997, at 9 and 11.
12
1999 Antelope Valley Business Outlook, Antelope Valley Board of Trade at 5.
13
Conversation with Judy Turner, Director of Business Development, Los Angeles County Economic
Development Corporation, June 3, 1999.

6
VentureStar will be built. Moreover, Palmdale is only one of three possible California
sites for the project.
14


City of Los Angeles. Within the boundaries of the federal Empowerment Zone (here
after known as the “EZ”)
15
are over 960 metal work companies, which employ nearly
22,000 people. Metal work is the second largest manufacturing sector in the EZ, next to
apparel production. Metal work represents about 20 percent of all manufacturing and 15
percent of the manufacturing employment base in the EZ. By far the largest segment of
metal work is fabricated metal products, which employs half of the workforce in the
industry. Next is industrial machinery manufacturing, which employs another 33

percent.
16


San Fernando Valley/Santa Clarita Valley. Recent studies
17
about the region
18
do not
break out manufacturing into subsectors. At best, a distinction is drawn between
technology-based manufacturing and general manufacturing. “Technology-based”
manufacturing includes aerospace and defense-related manufacturing. This segment
represents the second largest employer in the region, despite the job losses from the
recession. “General manufacturing” refers to all other kinds of manufacturing. This sector
also declined during the recession. However, it remains the Valley’s largest provider of
lower-skilled jobs.

In a data-run of SIC codes 34 and 35,
19
manufacturers of fabricated metal parts and
finished products, SIC 34, have the largest number of employees in sheet metal work,
followed by plumbing fixtures and fittings; hardware such as bolts, nuts, screws, rivets
and washers; and services such as stamping, electroplating and coating. For SIC 35,
industrial machinery, companies are concentrated in industrial and commercial
machinery manufacturing of all types, including computer peripheral equipment, machine
tools, industrial molds and ball bearings.

14
Id. The other two sites are Vandenberg Air Force Base and Harpers Dry Lakebed in San Bernardino
County.
15
The Zone encompasses a geographical area that is about 19 square miles in size and includes the
communities of Pacoima, Boyle Heights, the East Downtown Corridor, the Historic Corridor, Central
Avenue, the Slauson Industrial Corridor, the Broadway District, Watts and Firestone-Willowbrook.
16
Total Manufacturing in the Supplemental Empowerment Zone, Community Development Technologies
Center, May 1997. Research done for the Los Angeles Community Development Bank.
17
Partnerships for Progress, An Economic Strategy for the San Fernando Valley, SRI International, Valley
Economic Development Center and Economics Research Associates. See also Report and Findings on the
San Fernando Valley Economy, 1998, San Fernando Valley Economic Research Center.
18
San Fernando Valley is bounded by the Santa Susana Mountains to the north and west, the Santa Monica
Mountains to the south, and the San Gabriel Mountains to the east. The region includes Burbank,
Calabasas, Glendale, Hidden Hills, portions of Los Angeles, Santa Clarita and San Fernando.
19
Data-run conducted by Community Development Technologies Center, March 1999, using Dun &
Bradstreet. The San Fernando Valley is defined by core zip code areas.

7
A subregional study
20
of the Northeast San Fernando Valley
21
uncovered 606 business
establishments in the metal work industry. Over half are engaged in the manufacturing of

industrial machinery or component parts, and another 38 percent are in fabricated metal
products. All together, these 606 firms employ nearly 10,000 residents. The largest
concentration of metal work firms is found in Pacoima, Sun Valley and North
Hollywood.

San Gabriel Valley. A 1998 study of the San Gabriel Valley industrial clusters
22

revealed that metalwork companies employed about 22,600 people in the region. The
largest component of the cluster was found in industrial machinery, with over 8,600 jobs,
followed by: fabricated metal products, with over 6,500 employees; primary metals, with
nearly 4,000 employees; metal services with just over 2,000 employees; metal work
machinery and tools with 1,100 employees; and wholesale with several hundred
employees.

There is a definite geographic clustering of firms in the San Gabriel Valley. Industrial
machinery manufacturers are mainly located in the northern part of the San Gabriel
Valley along the 210 freeway; this area includes the cities of Pasadena, Monrovia, Azusa
and Glendora. Companies making components are found in the southern part of the
Valley, with the largest concentration in the City of Industry-La Puente, El Monte, South
El Monte and Montebello. Metalworking is experiencing the greatest growth in the
Industry-La Puente areas, based on 1991 to 1996 data.
23


While metalworking is a significant segment of the region’s economy, residents seem to
be ambivalent about the merits of attracting more manufacturing firms into the Valley. In
a recent public opinion poll, 43 percent of the polled respondents agreed that there should
be efforts made to attract new manufacturing businesses, with another 6 percent strongly
agreeing with this statement. On the other side, 38 percent disagreed and another 5

percent strongly disagreed; only 8 percent responded with “don’t know.”
24



20
Northeast San Fernando Valley Sector Employment Report, Community Development Technologies
Center, November 1998.
21
Northeast San Fernando Valley is bounded by the 210 Freeway to the north, the 405 Freeway to the west,
the 134 Freeway to the south and the 2 Freeway to the east. This subregion includes Sylmar, San
Fernando, Pacoima, Sun Valley, Panorama City, Van Nuys and North Hollywood. Parts of Glendale and
Burbank are also included.
22
San Gabriel Valley Industrial Cluster Study, Applied Development Economics, revised June 1998. See
also, San Gabriel Valley 1998-99 Economic Overview and Forecast, Los Angeles Economic Development
Corporation (1998). This region is bounded on the west by the cities of La Canada/Flintridge, Pasadena,
South Pasadena and Monterey Park. To the north are the San Gabriel Mountains and the foothill
communities of Altadena, Monrovia, Azusa, Glendora and La Verne. The southern boundary is marked by
the 60 freeway and picks up Hacienda Heights, Rowland Heights and Diamond Bar. The eastern boundary
goes to the San Bernardino County line and includes the cities of Pomona and Claremont. See 1998 San
Gabriel Valley Resource Guide at 43.
23
San Gabriel Valley Industrial Cluster Study, id.
24
San Gabriel Valley First Annual Survey & Report, San Gabriel Valley Economic Partnership and the
Rose Institute of State and Local Government, Claremont McKenna College, January 1999.

8
South Bay. This region

25
has historically had a large concentration of aerospace and
defense-oriented companies. As a result, it was especially hard hit by the defense budget
cutbacks in the past decade. Between 1987 and 1996, the total payroll for the South Bay
aerospace industry declined from $4.65 billion to $2.09 billion. At the same time,
business taxes generated directly by aerospace declined from $109 million in 1987 to
$56.8 million in 1996.
26


With a bottoming out of the recession in the second half of the 90’s, South Bay business
leaders undertook an in-depth analysis of the region’s industrial base. In assessing the
future of the region, this analysis concluded that three anchor industries should be
targeted for business attraction and retention programs: high technology, transportation
and trade, and entertainment/multi-media.
27
The high tech category includes aerospace,
computers and satellite communications. In addition to these anchor industries, “linked”
industries were also recommended for retention and attraction; these include metals and
industrial machinery. Firms in these related industries are geographically clustered. Two
out of three South Bay manufacturing workers are employed in just four cities: El
Segundo, Torrance, Hawthorne and Carson.

Southeast Los Angeles County. This region
28
contains the historic industrial core of the
county. It was the home for traditional “smokestack” manufacturing, such as steel and
tire production, until these firms disappeared in the late 70’s. Then the region was
pummeled again by the decline in aerospace and defense spending. From 1988 to 1995,
aerospace employment dropped a precipitous 60 percent.

29
Because so much durable
manufacturing was concentrated in this part of the county, it has had an especially
difficult time climbing out of the recession.

To facilitate a coordinated response to the downturn, the Gateway Cities Council of
Governments was formed in 1996. This body connected together 27 cities and the
County. A nonprofit economic development organization, the Gateway Cities
Partnership, was formed to mobilize and manage short- and long-term economic
development initiatives. Its responsibilities include industrial cluster support, workforce
transition, market development, site reuse and technology innovation.


25
The South Bay is bounded by the I-105 freeway on the north and the I-110 freeway to the east. The
Pacific Ocean is the western and southern boundary. This region covers 16 incorporated cities, including
Inglewood, and stretches of unincorporated county territory between Inglewood and Hawthorne and around
Carson.
26
South Bay Economic Adjustment Strategy, Executive Summary, Economic Roundtable, Beltramo and
Associates, Kosmont & Associates, UCLA and USC Departments of Geography, April 1998. See also
1997/98 South Bay Economic Profile & Forecast, Los Angeles Economic Development Corporation,
October 1997.
27
South Bay Economic Adjustment Strategy, ibid.
28
Southeast Los Angeles County is the region bounded by Whittier, Santa Fe Springs, Norwalk, Cerritos
and Hawaiian Gardens to the east; the Pacific Ocean on the south; the 710 freeway to the west, picking up
Lynwood, South Gate, Huntington Park, and Vernon; and to the north, Commerce, Montebello and Pico
Rivera.

29
Southeast Los Angeles County Defense Adjustment Strategy, DRI/McGraw Hill, 1997.

9
The Southeast Los Angeles County Defense Adjustment Strategy report identified metals
and aerospace/defense as industry clusters which represent the region’s historic strengths.
However, these industries also require intensive support because recovery has been
slower for firms in these sectors. In a survey of durable manufacturing firms, which
included aerospace and defense subcontractors, workforce development was ranked as
one of the top three priorities. Over half of the responding firms reported problems in
recruiting qualified job applicants with needed skills. Among high tech companies, a
similar survey identified a need for the upgrading of skills for current employees.


Conclusion

As a linchpin industry in the region, metal work has seen its share of crises. It has
suffered through the disappearance of traditional “smoke stack” manufacturing; the loss
of local production to offshore facilities; the downsizing of defense and aerospace; the
mergers of the prime contractors; and the contracting of services to outside suppliers and
other vendors.

As the industry continues to undergo restructuring, however, opportunities exist to build a
support system that will help it weather the turmoil in the global marketplace. One of
these is the development of a coordinated, flexible workforce training system that can
meet the industry’s short-term training priorities, while addressing the longer term need
to grow new talent.

To recruit new blood into this sector, industry leadership will have to overcome the
negative image of manufacturing as dirty, monotonous assembly line work. This should

not be a difficult undertaking, however, since metalworking has evolved into
sophisticated, state-of-the-art operations with the advent of new technologies.

Moreover, it offers a flexible career path that provides many options for job seekers. One
can start in traditional blue collar jobs and work up to the skilled trades, such as tool, die
and mold-making. Or one can start in machining and learn computer numerical control
processes. With continuing education, a person can become a manufacturing technician,
which, in turn, can lead to an engineering career. If an individual has entrepreneurial
ambitions, he or she can move into a business pathway. This diversity of career options
and the high salaries associated with blue and white collar jobs help to make
metalworking a very attractive industry. Subsequent reports commissioned by the
Collaborative will examine these issues more closely.









10
REFERENCES

General

A.T. Kearney, Los Angeles Regional Technology Alliance and Los Angeles Economic
Development Corporation, Beyond Consolidation: A Study of the Continuing
Transformation of Aerospace and Defense in Southern California (1998).

Los Angeles Economic Development Corporation, 1998-99 Economic Forecast and
Industry Outlook (July 1998).

Los Angeles Economic Development Corporation, Manufacturing in Los Angeles (June
1999).

Southern California Association of Governments, 1999-2000 Regional Economic
Forecast for Southern California.


Antelope Valley

Alfred Gobar Associates, 1997 Antelope Valley Labor Base Analysis (October 1997).

Antelope Valley Board of Trade, 1999 Antelope Valley Business Outlook.


Los Angeles City

Community Development Technologies Center, Total Manufacturing in the
Supplemental Empowerment Zone (May 1997).

UCLA School of Public Policy and Social Research/Advanced Policy Institute, The City
of Los Angeles/UCLA Industry Cluster Initiative Project (1998).


San Fernando Valley

Community Development Technologies Center, Northeast San Fernando Valley Sector
Employment Report (November 1998).

San Fernando Valley Economic Research Center, Report of Findings on the San
Fernando Valley Economy (1998).

SRI International, Valley Economic Development Center and Economics Research
Associates, Partnerships for Progress, An Economic Strategy for the San Fernando
Valley (1998).


11
San Gabriel Valley

Applied Development Economics, San Gabriel Valley Industrial Cluster Study (Revised)
(June 1998).

Los Angeles Economic Development Corporation, San Gabriel Valley 1998-99
Economic Overview and Forecast (1998).

1998 San Gabriel Valley Resource Guide (BenchMark Publishing Company).

San Gabriel Valley Economic Partnership, Rose Institute of State and Local Government,
First Annual Survey of the San Gabriel Valley (January 1999).


South Bay

Los Angeles Economic Development Corporation, 1997/98 South Bay Economic Profile
& Forecast (October 1997).

Economic Roundtable, Beltramo and Associates, Kosmont & Associates, UCLA and

USC Departments of Geography, South Bay Economic Adjustment Strategy, Executive
Summary (April 1998).

South Bay Economic Development Partnership, 1998 South Bay Patterns for Change.

South Bay Economic Development Partnership, 1998 Survey of South Bay Businesses
(September 1998).


Southeast Los Angeles County

DRI/ McGraw Hill, et. Al., Southeast Los Angeles County Defense Adjustment Strategy
(1997).














12

APPENDIX


1. Table: Metalwork Industry, Los Angeles County
2. Map: Los Angeles County Metalwork Industry
3. Map: Los Angeles County Primary Metals Subsector
4. Map: Los Angeles County Fabricated Metal Products Subsector
5. Map: Los Angeles County Industrial Machinery Subsector
6. Map: Los Angeles County Aircraft and Aerospace Subsector


Metalwork Industry Los Angeles County
SIC Description
Size of Company
(Number of
Employees)
Number of
Companies
Total
Number of
Employees Annual Sales
Response Rate
for Annual

Sales
33 Primary Metals 1 to 50 357 5,226 $1,029,572,285 87%
51 to 100 45 3443 $2,332,002,591 84%
101 to 500 44 8180 $978,809,914 68%
501 and above 3 4826 $149,515,000 33%
Other: not reported 12 $5,330,000 17%
SIC 33 subtotal 461 21,675 $4,495,229,790
34 Fabricated Metal Products 1 to 50 2129 22498 $3,708,752,421 93%
Except Machinery and Transportation 51 to 100 135 9987 $3,330,530,894 81%
101 to 500 99 19890 $2,104,618,555 77%
501 and above 4 3500 $350,700,000 75%
Other: not reported 44 $77,018,759 30%
SIC 34 subtotal 2411 55875 $9,571,620,629
35 Industrial and Commercial Machinery 1 to 50 3506 30557 $4,637,035,981 93%
and Computer Equipment 51 to 100 127 9304 $3,941,394,516 86%
101 to 500 91 17988 $2,819,661,858 73%
501 and above 2 3000 $5,807,213,750 50%
Other: not reported 68 $32,400,255 15%
SIC 35 subtotal 3794 60849 $17,237,706,360
37 Transportation Equipment* 1 to 50 234 3152 $1,963,192,930 90%
(Aircraft, Engines and Parts; Aerospace, 51 to 100 22 1759 $160,975,827 73%
Parts and Related Equipment) 101 to 500 46 11185 $11,409,917,284 74%
501 and above 18 91642 $212,729,975 11%
Other: not reported 28 0%
SIC 37 subtotal 348 107738 $13,746,816,016
Totals 7014 246137 $45,051,372,795
Source: Dun and Bradstreet (June-July 1999)
Data believed reliable but accuracy is not gauranteed.
Data is self-reported by companies and may not be complete.
All information based on companies' primary and/or secondary SICs.

*Includes SICs 3721, 3724, 3728, 3761, 3764, and 3769
Complied by: The Community Development Technologies Center (D.Gilliam and E. Mailian) 7/30/1999
L
OS
A
NGELES
C
OUNTY
W
ORKFORCE
P
REPARATION
AND
E
CONOMIC
D
EVELOPMENT
C
OLLABORATIVE
M
etal
M
anufacturing
In Los Angeles County
C

OMMUNITY
D
EVELOPMENT
T
ECHNOLOGIES
C
ENTER
Part II: Employer Personnel Practices
February 2000



About This Report

This report is produced by the Community Development Technologies Center, a regional
nonprofit organization that provides training, applied research and technical assistance
services in community economic development. CDTech is project director for the Los
Angeles Regional Workforce Preparation and Economic Development Collaborative, a
three-year pilot project to help establish an integrated workforce development system for
the county.

The work of the Collaborative is led by a Joint Management Committee made up of
representatives from: the California Workers Assistance Program, AFL-CIO, the
Department of Public Social Services for Los Angeles County, the Employment
Development Department, Los Angeles Area Chamber of Commerce, Los Angeles
County Office of Education, Los Angeles Economic Development Corporation, Los
Angeles/Orange Counties Community Colleges Consortium, and the South Bay Private
Industry Council.

The contents of this report are solely the responsibility of CDTech. For additional

information about this report and the project itself, please call Linda J. Wong at (213)
763-2520, x 235.



1
THE METAL MANUFACTURING INDUSTRY
IN LOS ANGELES COUNTY

EMPLOYER PERSONNEL PRACTICES


Introduction

This report was commissioned by the Los Angeles Regional Workforce Preparation and
Economic Development Collaborative (here after known as the “Collaborative”). The
Collaborative is one of six regional projects established under California’s Regional
Workforce Preparation and Economic Development Act of 1997. The purpose of the
legislation is to facilitate the implementation of a seamless, integrated workforce
development system by strengthening existing partnerships in economic development,
education and training, welfare reform and school improvement. The goal is to provide
workforce development programs and services that are responsive to the training needs of
existing and emerging industries.

The Los Angeles Collaborative is addressing this particular goal by developing two
products:

• An Internet search engine () that will connect
different information systems, so that job seekers, employers, education and
training providers and others can easily access information about jobs, career

ladders, and education/training resources; and

• A “skills gap” profile of key occupations in five industries—apparel, health
services, food preparation, high tech/electronics and metalworking—so that
identified gaps in skill sets and education curricula can be closed through
industry-led efforts.

This report focuses on the recruitment, hiring, training and promotion practices of
metalwork firms in Los Angeles. It is the second of two reports which examines the
“demand” side of the equation—the metalwork industry and the small companies which
dominate this sector. The first report provided an overview of the industry. This second
report looks at specific employment and training practices of small metalwork firms. It
provides information about what they do to identify and recruit job applicants and who
makes the hiring decisions. The report also describes the kind of training that employers
provide their workforce and the various career paths available to production workers and
other employees. What makes this approach different from traditional labor market
analysis is that it attempts to go beyond the hard data, which emphasizes job numbers and
growth statistics, to find out what companies actually do to address labor shortages and
other human resource issues. As such, it provides important insights into employer
behaviors that will be useful to the education and training community.


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Methodology

The information for this report is based on employer responses to a survey questionnaire
and face-to-face interviews with a select group of metalwork companies. A database of
firms was developed from two sources—the California membership list for the National
Institute for Metalworking Skills (“NIMS”), an industry-supported nonprofit, and a list
created by Rebuild LA in 1994, when it first researched the industry. A total of 27

companies responded to the survey questionnaire (a copy of the survey instrument is
found in the Appendix to this report). Fourteen firms were affiliated with NIMS, while
thirteen came from an RLA database of sixty-one companies. Interviews were conducted
with seven Los Angeles area metalwork employers. Emphasis was placed on small
firms, since they dominate the local industry. The smallest company interviewed had 18
employees, while the largest had a workforce of 120. Most of the metalwork employers
were commercial firms or had a diversified customer base; so they were not aerospace-
dependent for their business.


Characteristics of the Respondent Firms

Two-thirds of the respondents were Los Angeles County-based businesses. The rest were
located in other parts of Southern California and the Bay Area (mainly the East Bay and
Santa Clara County). Seventeen companies, or 63 percent of the respondents, had fewer
than 100 employees. Another seven firms had an employment base ranging from 101 to
250 employees. Only three manufacturers had more than 251 employees.

In terms of product niches, the firms represent the fabricated metals and industrial and
computer equipment subsectors. They manufacture a wide range of products, from
commercial food processing machines, spray booths, and computer components to
springs, wires and light sockets. Also included were a mix of firms that provide
stamping, plating and other specialized services for metalwork companies. For the most
part, the respondents represented the commercial side of the industry. Few companies
indicated that aerospace or defense made up the bulk of their business. In fact, most
manufacturers and service vendors had a diversified customer base.


Recruitment Strategies

Small firms, unlike their larger counterparts, have limited human resource capacities.
Owners and mid-level managers often wear multiple hats and handle a variety of
functions. As a result of these staffing limitations, small firms tend to use recruitment
strategies that require a minimum of effort but yield maximum results. Not surprisingly,
the most efficient screening mechanism turned out to be the company’s existing
workforce. Employees are familiar with the work requirements, and they know what
needs to be done within their respective departments. Word-of-mouth referrals from
other employees were therefore cited as the most common form of recruitment.


3
A very close second was the newspaper. However, some of the employers admitted that
they did not have a lot of success with advertisements. These kinds of job postings
generate a large number of responses, requiring the company to do a considerable amount
of screening. Even when unqualified applicants are eliminated from the pool, the
remaining candidates are not necessarily the most ideal ones. As a result of these
limitations, some firms resorted to staffing services and temporary employment agencies
to recruit job applicants.

One metal fabricator used two different kinds of staffing services, one for hourly
employees and another for technical staff. Another company used a temporary
employment agency to fill vacancies in its accounting department. Even though staffing
services are expensive for small firms, they provide an efficient means of screening
potential employees and eliminate a major burden for small businesses with limited time
and manpower. One human resources director underscored the importance of having a
good screening mechanism to match job requirements with job applicants’ skills,
experience and temperament. She used the Employment Development Department as an
example, citing how, in the past, the agency had not done a good job of screening
applicants for job openings. More recently, however, it had made substantial
improvements by partnering with other organizations that took on the responsibility of

screening applicants before they were referred to employers for job interviews.

Even when a company uses a variety of recruitment strategies, it is not always successful
in filling job vacancies. Several employers noted that they had a difficult time finding
qualified applicants for certain positions. The most frequently mentioned were tool and
die making, welding, machining, computer numeric control (cnc) programming, and tool
designing with CAD technology. Several companies also said that mid- and senior-level
managers were hard to find.


Making the Hiring Decision

Two-thirds of the respondents said that hiring decisions are made by the department
managers where the job vacancies exist. This person plays an important decision making
role whether or not a company has a human resources (HR) director. In cases where a
firm has an HR unit, the hiring decisions are made jointly by the department manager, in
conjunction with the human resources director, or sometimes with the owner of the
business.

All of the respondents said that they hired both entry-level and experienced employees.
However, one production supervisor indicated that he preferred to hire people with at
least two years of experience with the equipment they would operate. This kind of
operating experience with different machines turned out to be a major issue for small
machine shop employers who had a lot of specialized equipment on the production floor.

While companies have different personnel policies, a common theme did emerge from
the survey responses and employer interviews: they cannot afford a lot of employee