Cluster studies provide useful information

Pasadena Star News

By: Cynthia Kurtz

Posted: 7/02/2014 

Do you know your LQ? Maybe we should start with the basics. Do you know what an LQ is? Losing Quarter? No. Last Quartermaster? Nice try James Bond fans but the LQ I am talking about stands for "Location Quotient." 

Location Quotient is a relatively new economic term. It refers to the concept of determining what types of industries are concentrated within a city, region or state's boundaries. The study - often referred to as a cluster study - was developed at the Institute of Strategy and Competitiveness, Harvard Business School, by Professor Michael Porter. 

The Los Angeles Economic Development Corporation (LAEDC) has adopted the principle and has analyzed the industry clusters in Los Angeles County. The San Gabriel Valley Economic Partnership thought this work was so important that we asked LAEDC to do a similar study for the San Gabriel Valley. 

The concepts behind cluster analysis are simple. First, determine the amount of employment by economic sectors in the study region and compare it with the employment in another region or the state.  

If the amount of SGV employment in a certain sector equals 10 per cent but only five percent of the state employment is in that sector, the SGV's LQ is 2. Any LQ over 1 means there is a "concentration" of employment in that sector.

Next, you look to see if the sectors in which your region has a concentration of employment are adding or losing jobs. It may be that a region has an area of concentration but that industry is losing jobs. In these cases the concentration will more than likely be short lived.

Finally, you check for the industries that are producing products or services that are serving a wider area than just your region. These are the industries that are bringing new dollars into the region and generating the region's economic growth.

We know the largest employment sectors in the SGV. But the "cluster study" allowed us to determine which ones were gaining jobs and increasing the region's overall wealth. 

The results are very interesting. For example, cutting edge hospitals like City of Hope are growing strongly. Food production and specialty food stores enjoy strong growth.

There are a number of manufacturing areas that are concentrated here and growing. These include metal products; electrical equipment; spring and wire products; and resin, rubber, and artificial fibers. All these products are used in the aerospace industry and aerospace enjoys one of the highest LQs in Los Angeles County.

Why am I so excited about this information? It is vital information to assist cities and the Partnership in focusing our business attraction and retention efforts. It can assist schools, colleges and universities in developing the training needed for the SGV's future workforce. 

No region controls its future. But the more we understand the trends creating the future, the more able we will be achieving the future we desire.

Manufacturing is finally gaining ground

Pasadena Star News

By: Cynthia Kurtz

Posted: 6/18/2014 

We keep hearing good economic news. The Ports of Long Beach and Los Angeles are busy. Developers are once again eyeing properties that have lain dormant for years. The Bureau of Labor Statistics confirmed last month that total nonfarm payroll employment has finally surpassed its pre-recession peak. There is even evidence of manufacturers expanding and adding jobs. 

The story of the decline in the number of manufacturing jobs is well known. It is not unique to the San Gabriel Valley nor to California. Across the U.S. manufacturing jobs began to decline in the 1980's. "Made in America" products became harder to find.

The San Gabriel Valley experience was repeated in regions across the country. In 2001 there were 94,000 manufacturing jobs in the SGV. Since 2000, the SGV has lost over 35,000 jobs in manufacturing resulting in an employment low of 58,175 in 2012.

The decline was not caused by a single event or because of a single reason. There were many simultaneously causes, each contributing to the rapid decline. Fewer regulations and cheap labor enticed many companies to move production facilities to other countries. Demand for products tanked as the housing market as well as other consumer spending sectors declined dramatically during the recession. Manufacturers began taking advantage of technology to increase productivity resulting in equal or higher output requiring fewer employees.

Last year economists began to report data suggesting that manufacturers would soon need to expand and hire workers. The manufacturing capacity utilization rate - which measures the percentage of actual output compared to potential output - reached a post-recession high. Severe weather constrained production in early 2014 but the May 2014 economic data released recently showed consumers are now releasing pent up demand.

The San Gabriel Valley is sharing in the manufacturing boom. For the first time in decades, manufacturing jobs increased in 2013. The SGV added 725 new manufacturing jobs. Economists predict that 2014 will show additional gains.

The region has experienced job expansion in several key manufacturing areas. Fabricated metal products manufacturing; resin, rubber and artificial fiber products; aerospace and parts manufacturing; and electrical equipment and components manufacturing - all businesses which serve the aerospace industry in Southern California - have posted job gains.

Pharmaceutical and medical manufacturing has also added jobs fueled by the strong healthcare sector in the San Gabriel Valley.

Californian's love of Asian and Mexican foods as well as an expanding demand around the globe for foods that are produced under the tight health regulations adhered to in the U.S. has resulted in new hiring in SGV food processing firms.

No one is predicting the return to the high employment numbers that manufacturing claimed in past decades but the growth of these specialized and high tech manufacturing jobs is welcome news. 

San Gabriel Valley adds 12,240 jobs

Pasadena Star News
By: Cynthia Kurtz
Posted 6/11/2014 

Hallelujah! The San Gabriel Valley added 12,240 jobs in 2013 - the largest yearly job increase since the recession devastated the local economy causing the loss of 55,000 jobs in less than two years. 

Healthcare is leading the San Gabriel Valley’s recovery adding close to 8,000 jobs in 2013 and between 26,000 and 29,000 jobs over the last decade. Healthcare now accounts for 115,200 of the region’s 645,400 jobs. Over the last 10 years, the largest job growth has been in physician offices (+5,000 jobs), hospitals (+3,900 jobs), home healthcare services (+1,900 jobs), and outpatient care centers (+1,800 jobs). 

We aren’t talking about administrative jobs in doctor offices and hospitals which are included in the administrative and support services sector. These jobs are health practitioners - people with M.D. degrees and professionals who are registered or licensed to provide health services like dental hygienists or dietitians. These are good paying jobs with average annual salaries between $55,000 and $64,000.

The growth in healthcare has also generated job growth in other related industries. Scientific research and development services, management and technical consulting, and pharmaceutical and medical manufacturing are also adding jobs.

Healthcare is not the only sector adding jobs. 2013 saw an increase of 3,200 jobs in leisure and hospitality - the businesses that support tourism. This is on the heels of adding 2,900 jobs in 2012. Tourism is a growing industry throughout Los Angeles County and 2013 was a banner year with a record 42.1 visitors coming to the LA region. These visitors spent a record $16.5 billion. 

The SGV is benefiting from these visitors - especially from Chinese tourists. They come to the SGV to visit friends and family, to see the Lio Fang Yuan Garden - Garden of Flowing Fragrance - at Huntington Library, to visit the Hsi Lai Temple and of course to enjoy authentic Asian foods - just as good as back home.

The average SGV hotel occupancy rate increased to an impressive 77.4 percent in 2013 - up from 61 percent in 2009. The average SGV room rate was $129.89 - up from a low of $118.52 in 2010.  Don’t be surprised to see some new hotels in the SGV. When it comes to tourism...we’re hot.

Another bright spot in the SGV economy is international trade. Our valley has a high concentration of international trade businesses. Some 6.7 percent of the region’s total jobs are in international trade compared with a total of 5.3 percent in Los Angeles County.

The Ports of Long Beach and Los Angeles handled 14.3 million containers in 2013 - a 3.4 percent increase over 2012. The outlook for increased trade in 2014 and 2015 is good. California’s top trading partners are expected to continue to experience strong growth. We certainly haven’t “recovered” yet. We still need 29,000 jobs to get back to the employment total in 2008 - a number we are unlikely to reach before the end of 2015. However, adding 12,240 jobs in a year is a good reason to celebrate.

Military vets have plenty of skills

Pasadena Star News

By: Cynthia Kurtz

Posted: 6/04/2014 

We often hear how difficult it can be for veterans to get jobs when they return state-side. Everyone appreciates what they have done and wants them to succeed when they get back home. But when it comes to hiring, many businesses don't think they have jobs that vets are trained for - not many businesses need a pilot or a boat operator.

Through a gracious invitation from C.L. Keedy, a proud member of the Pasadena Navy Foundation, I recently had the privilege of spending 24 hours on the USS Carl Vinson, an aircraft carrier. I learned a new appreciation for the skills veterans can bring to civilian jobs.

The carrier is named for Georgia Representative Carl Vinson who served 26 consecutive terms in the U.S. Congress and chaired the Naval Affairs Committee. From that powerful position he was able to shepherd the passage of the Naval Construction bill which funded the build-up of Navy forces in the Pacific. 

His work earned him the nick name "The Admiral" and an aircraft carrier named after him, an honor usually reserved for Presidents. The carrier was commissioned in 1982 a year after Representative Vinson's death. Today 75 percent of the men and women assigned to the "boat" that bears his name had not been born when it was commissioned.

I met many of the young men and women assigned to the Carl Vinson. Some were pilots who fly jets and helicopters from the carrier and some were sailors who drive the boat. But to run an aircraft carrier you need a lot more than just pilots and sailors who drive boats.

There are barbers, chaplains and painters. There are cooks who serve 15,000 meals a day, and laundry operators - doing 7,000 lb. of laundry a day. There is a police force. The boat is powered by an onboard nuclear reactor - all operated and maintained by sailors. There are four water treatment facilities turning sea water into really great tasting drinking water. 

All the planes, helicopters and equipment assigned to the carrier are maintained, repaired and tested by a skilled crew of mechanics. It is not surprising that the largest operation is logistics. Whether you want a jet engine or a light bulb, an egg or a tail pin cable, someone has to order, receive, inventory, store and dispense that item. And they have to be ready to do it anywhere around the world; no running to the Home Depot down the road if you forget something.

The boat operates 24 hours a day so the hours are long. The work is stressful - lives depend on everyone running a near perfect operation. The crews are disciplined, take direction well, and are getting a level of training few businesses could afford to offer.

You won't be able to hire any of the 5,100 sailors and air crews assigned to the USS Carl Vinson for a while. They are in training now for a 10 month deployment to Japan in August. But they will be relieving another carrier full of men and women who are just as well trained. Some of them will decide to continue Navy careers but many others will be headed back to look for positions with businesses. 

I asked one of the Chiefs if he sees any difference in the recruits today than those from 30 years ago when he joined. He quickly answered, "Yes. They are smarter and they are thinking about their future." When that future comes home looking for a job, businesses should remember that and hire a vet.

If you need assistance connecting with available veterans when you are hiring, contact the San Gabriel Valley Economic Partnership at 626-856-3400 and ask for one of our Business Development Managers.