The Southland Emerges as a Global Village : Economy: Trade with burgeoning Asian economies and the inflow of immigrants promise grand opportunities. Prosperity, though, isn’t a sure thing.

Around the clock, ocean liners cruise into San Pedro and Long Beach, laden with microwave ovens from South Korea, motorcycles from Japan, fruit juice from Brazil, auto parts from West Germany, dolls from China.

Towering cranes lift the containers to dry land, where burly longshoremen help reload them onto 18-wheelers and rail cars. Within 48 hours, the ships are repacked with U.S. exports, hitched to tugboats and guided back to the high seas.

The booming trade is just one sign of Southern California’s growing prominence in the global economy, its greatest long-term economic asset, many now believe.

“Los Angeles isn’t going to continue to grow just on its own,” said Goetz Wolff, chief economist at the Los Angeles Economic Roundtable. “It’s growing because of its role in the global economy.”

The term “global economy” may sound abstract, but it is remaking Southern California’s business landscape in tangible ways. The global economy is:

- A Simi Valley high-tech firm owned by a native of India, employing workers from Colombia, El Salvador, Vietnam, Cambodia, Afghanistan and 20 other countries.

- An Orange County company with a British-born president exporting high-tech surveillance cameras to Japanese police departments.

- A Santa Monica consulting firm helping companies in Asia and Europe sharpen their corporate image through new trademarks, logos and other symbols.

In the 1990s, Southern California will be the scene of countless similar tales, arising from forces that are propelling it forward in the world economy.

Increasingly affluent nations--notably in Asia--are spawning a new cadre of ambitious companies, as well as large numbers of wealthy, sophisticated consumers and tourists. America remains a secure investment haven for people from Hong Kong, Taiwan and other less stable nations.

In addition, changing technology and looser regulations have created global financial markets--broadening the horizon of investors in Asia, Europe and America. Modern communication and transportation, meanwhile, have made it simpler for a firm to operate on the world stage.

International trade and the global economy are “going to be the engine of economic growth, the factor that moves the regional economy forward,” said James Doti, an economics professor at Chapman College in Orange County.

But the global links do not guarantee a prosperous future--for America in general or Southern California in particular. The real winners will be countries that invest in education and modern technology; that are able to offer products and services that the rest of the world wants to buy.

These are the nations that will get richer, while others find their wealth diminishing and their industries losing out to more able rivals.

The international economy “is certainly going to be a source of economic growth, but I can’t help but ask myself which industries are going to suffer or be eliminated because of it,” declares Joseph A. Wahed, chief economist at Wells Fargo Bank in San Francisco.

Despite such concerns, no U.S. region is better poised to gain from the global trends than Southern California.

Once a mere backwater for America’s Eastern power centers, the region now represents a marketplace rivaling that of New York. Its powerful economy is home to an array of international business services and lures billions of dollars in foreign investment.

Moreover, its Pacific location links Southern California to the buoyant, trade-oriented economies of Asia in important ways. The region has large, growing communities of Chinese, Koreans, Filipinos and others who maintain ties with their homelands and can pave the way for fellow countrymen to start businesses and invest here.

Asians moving to America “seek out people who are familiar with their culture, who can speak the language,” observed Hilary Tan, a Malaysian native who is chairman of the Asian Business League of Southern California. “That presents enormous opportunities for those of us here.”

In the 1990s, the international ties will yield profits and wages that ripple throughout Southern California’s economy, helping shopkeepers, grocery stores, business in general. And they will continue to transform the region’s economy, creating new sources of opportunity even as older ones, such as defense, shrink in importance.

Already, 10% of the region’s jobs may be supported by global business dealings, according to the Los Angeles 2000 Committee, a nonprofit group that last year completed a major study of Southern California issues.

By the middle of the new decade, “we’ve got the potential for one in four jobs being related, directly or indirectly, to international trade,” said David T. Hulett, an economic consultant to the committee.

He is not just talking about people who haul containers or drive trucks. Indirectly, global links will benefit retail, finance, law, marketing, accounting and other services. As trade has boomed in the past two years, Williams Dimond and Co., a Long Beach firm that assists ship owners, has expanded its staff by about 50% to include 130 Southern Californians, said James R. Edwards, vice president of sales.

“We’ll find (boat) repair and maintenance facilities. We’ll find crews, if necessary. Anything associated with the shipping industry, we will do,” Edwards said.

Yet distant economies are not linked by trade alone. Perhaps the most fundamental flow of all is the human one.

In the 1990s, Southern California will continue to attract people in search of opportunity thousands of miles from their birthplace. They will range from skilled individuals who contribute needed scientific and engineering acumen to those who bring little more than muscle and the yearning for a better life.

The economy will reward them in varying degrees, depending on how much skill they have to offer.

Sudesh Arora, an engineer and native of New Delhi, was drawn to America for “the challenge of competing with the best.” Today, Arora, 45, is president of Natel Engineering, a Simi Valley maker of electronic components used by defense and aerospace firms.

While the defense industry faces big cutbacks in the coming years, Arora--who employs an international work force of 175--looks to the 1990s with determination: “We’ve just got to work harder, find out where our technology can be used--and go after those opportunities,” he maintains.

Others see the U.S. economy from a profoundly different vantage point. They are the many thousands of immigrants, mostly from Latin America, with little education, who toil for low wages in Southern California’s factories.

Their labor helps keep the region’s manufacturers competitive at a time when many parts of the United States are losing their industrial base.

Jose Line, 39, is one of them, a Guatemalan who supports his wife and three children on the $6.75 an hour that he gets driving a truck for a furniture factory. It’s a hard struggle to scrape by, to keep his 12-year-old Mercury on the road, to pay the bills. Line--who left school after the sixth grade--will probably never attain the middle-class luxuries that most Americans take for granted.

But his perspective is forged in Third World poverty: “Things are more, more easy (in America),” he explained pleasantly, wearing a blue Windbreaker-type jacket and torn green corduroys.

Even at the neighborhood level, the enterprise of immigrants will continue to make a difference.

Steve Yeon Cho, 43, arrived in Los Angeles in 1981 as the branch manager of a South Korean export business. But soon, he recalled, “I lost my job and I had no place to go because the company was bankrupt.”

After a failed import venture in Koreatown, Cho and his wife bought a dry cleaning business in Glendale. But even that proved discouraging, when some of the former owner’s customers were wary of the immigrant owners.

“I cried almost every night,” recalls Cho’s wife, Christine. “But we did it our way, by working hard--11 hours a day. We smiled. We tried to do our best.”

Today, her husband is president of the 1,800-member Korean Dry Cleaners Assn. in Southern California, and the business seems on solid ground. “It’s a steady business,” Cho said gratefully, “not like imports and exports.”

Along with an international flow of people into Southern California has come a flow of cash. Last year alone, Japanese real estate purchases in Los Angeles and Orange counties exceeded $3.5 billion, according to Kenneth Leventhal and Co., an accounting and real estate consulting firm.

In the coming years, the foreign investment may take more beneficial forms, particularly as the Japanese respond to U.S. political sensitivities.

“Instead of buying completed buildings, more and more Japanese companies will build their own,” predicts Yukuo Takenaka, an investment banker in Los Angeles. “Who can complain that the guy is building something?”

Although the British, Canadians and West Germans have developed large stakes in Southern California over the years, future players are more likely to be from Taiwan, Hong Kong, South Korea, Singapore and Australia.

“I don’t think it’s unrealistic to say that by 1995, these other Asian countries will (in total) be investing about 25% the amount the Japanese are,” said Jack R. Rodman, a managing partner with Kenneth Leventhal.

Clearly, Southern California’s Pacific ties should pay off in the 1990s. In recent years, major Asian currencies have strengthened against the dollar, providing their residents with new purchasing power--to visit America, to send children to college here, to purchase U.S.-made goods and services.

Southern California already ranks first nationally in the value of imports that it handles and second, behind New York, in the value of exports, according to the draft of a recent report by the Southern California Assn. of Governments.

Behind the rankings are fascinating examples of enterprise by those who have figured ways to take advantage of global opportunity.

Earlier this year, for example, Intelligence Integrators Inc. of Laguna Hills signed a half-million-dollar contract with a Japanese distributor. The distributor plans to sell the Orange County concern’s night-vision camera equipment to police departments in Tokyo and Osaka.

“The Japanese got us off the ground,” said Lionel Simons, the British chairman of Intelligence Integrators, which is looking forward to sales in Europe and other Asian countries.

In the northeastern San Fernando Valley, the Seaton-Wilson division of Systron-Donner, a Bay Area firm owned by the British, sells aerospace products in Europe and Asia. Among the exports: parts used in rocket launch vehicles being built by the government of India.

“They just contacted us out of the blue, and we’ve been working with them for the past three years,” said Robert Baker, marketing manager.

Nor are global opportunities limited to manufacturers. In Santa Monica, Bright & Associates, an “identity and design” consulting firm, helps companies that wish to establish their image internationally.

“To do that, they need an identity like IBM or RCA--they need to look like a company that can do business worldwide,” said Keith Bright, chief executive of the firm that designs trademarks, symbols, graphics and other elements that convey a company’s image to outsiders.

Clients have included a Japanese architecture firm and a New Zealand steel maker, Bright said, projecting that such foreign business could account for 20% of sales in 1990.

But despite the success stories, the global forces also present serious challenges. Trade-propelled growth will mean greater pressure on Southern California freeways, including more trucks and exhaust fumes. In fact, strapped transportation corridors ultimately could limit potential trade expansion. “If we can’t move our goods by some method, we could see some constraint on our trade competitiveness,” said J. Gordon Palmer Jr., an expert on the area’s economy and planning manager for the Port of Long Beach.

And for all its natural advantages, Southern California is not insulated from the broader question of America’s performance in a competitive world economy.

In the 1970s and 1980s, many U.S industries, including autos, steel, tires and consumer electronics lost crucial ground to foreign rivals. In the new decade, setbacks could spread into a variety of service industries.

“In the 1990s we’re going to see a different kind of competition from the Pacific nations,” Wells Fargo’s Wahed said. “It’s going to attack the financial institutions, the media, entertainment, hotels.”

Alert entrepreneurs no doubt will find ways to profit in the global environment. For America to benefit fully, however, it must sell more goods and services to the rest of the world, while importing relatively fewer. And that, many believe, will require a greater priority on investment in schools and industry and less spending on consumer luxuries.

Otherwise, rival economies will surpass it in wealth, and it will be harder to improve the U.S. standard of living.

“There’s going to be great opportunities in the Pacific,” cautioned Lawrence B. Krause, a professor at the Graduate School of International Relations and Pacific Studies at UC San Diego in La Jolla. “But the degree to which we compete well will determine how wealthy we’re going to be.”

JAPANESE INVESTMENT IN U.S. REAL ESTATE First two columns show dollar value of Japanese investment and percent of total Japanese investment as they stood through 1987. Second two columns show total and percentage for 1988 alone.

THROUGH 1987 1988 A Total $ amount Total $ amount (millions) % of total (millions) Orange County 380 1 506 Atlanta 130 0 718 Boston 162 1 683 Chicago 1,080 4 1,871 Dallas 950 4 505 Honolulu 4,420 17 1,325 Los Angeles 4,570 17 3,049 New York 5,831 22 2,802 Phoenix 1,590 6 140 San Diego 400 2 421 San Francisco/Oakland 1,172 4 740 Seattle 731 3 341 Washington 431 2 638 Other areas 4,493 17 2,805 Total 26,340 100% 16,544

LONE % of total Orange County 3 Atlanta 4 Boston 4 Chicago 11 Dallas 3 Honolulu 8 Los Angeles 18 New York 17 Phoenix 1 San Diego 3 San Francisco/Oakland 5 Seattle 2 Washington 4 Other areas 17 Total 100%

Source: Kenneth Leventhal & Co.