Defying the Odds : San Gabriel Valley: Rising Economic Star

INDUSTRY —  On the factory floor of the Zenith Specialty Bag Co. in this aptly named Los Angeles suburb, men and women in hair nets and T-shirts stand at green and gray metal machines that spit out paper bags by the caseload: cookie bags, hamburger bags, French bread bags.

The air is stifling and carries the piquant aroma of printer’s ink. Workers wear ear protectors to ward off the din of whirring fans, clanking metal and humming electricity.

But that sound is music to Scott Anderson, president of the 160-employee company his family has run since 1955. It is the sound of commerce, San Gabriel Valley style: unglamorous but unwavering.

“It’s been great,” Anderson tells a visitor. “The only down year that we’ve had was 1990, when sales dipped 7%. Prior to that, for 17 years we saw increases every year.” With an expected $15.5 million in sales to fast-food restaurants and other customers, this year will be a record, he adds proudly.

In a time of economic upheaval for most of Southern California, when jobs are uncertain and the future unclear, the San Gabriel Valley is defying the odds.

Though numbers are hard to come by, there is evidence that this far-flung region, encompassing 31 cities and 1.3 million people, has weathered the just-ending recession better than the rest of Los Angeles County and stands to outperform it in the years to come.

Jobless rates for most of the valley’s cities are lower than the county as a whole. Moreover, from 1980 to 1990, total employment in the valley grew 32%, better than the county’s 30.1%, according to the San Gabriel Valley Subregional Plan prepared by the Cordoba Corp. for the San Gabriel Valley Council of Governments. From 1990 to 2010, the valley’s employment growth should outpace the county 29.7% to 22.8%, the report predicted.

Even a casual observer can see that business is good here: from the tony boutiques and restaurants of Old Town Pasadena to the blossoming of Chinese-language signs on strip malls along Colima Road in Hacienda Heights to the steady stream of truck traffic along the 605 Freeway in and out of the warehouses and factories of Industry.

According to economists and executives, the reasons for the valley’s success vary:

* The valley has fewer of the aerospace and defense-related industries that hurt the rest of Southern California during the recession and whose jobs are the least likely to return once the economy turns up.

* Comprising communities as disparate as wealthy San Marino and gritty Industry, the valley is also ethnically and economically diverse. And there are large concentrations of the kinds of industries that are expected to do well in the future: health care, services, construction and retail, as well as light, non-aerospace manufacturing.

* With older, well-established Asian American communities such as Monterey Park and Alhambra, and booming newer ones such as Hacienda Heights and Diamond Bar, the valley finds itself the destination for a disproportionate amount of capital and trade from Asian regions such as Taiwan, Hong Kong and, increasingly, mainland China.

And the valley remains close to freeways, airports and harbors; has a diverse and skilled work force, and--aside from the heat and smog--a relatively high quality of life. The values here tend toward family, community, tradition and back-yard barbecues, residents say.

“The primary reason we remain here is because our roots go down so deep,” said Anderson, whose father was from Alhambra and whose siblings all live nearby. “Being in the San Gabriel Valley . . . enables us to retain and draw on a good employee base in this area . . . and without that, we might have had to look out of state. . . . The quality of our employees enabled us (in part) to weather the recession.”

There is also an awakening consciousness among civic and business leaders here that economic development will require not just individual effort by cities, but regional coordination and cooperation--an attitude that has caught on faster here than in the rest of Southern California, officials say.

One effort was to strengthen the old San Gabriel Valley Assn. of Cities, a loosely knit consortium of communities. In March, the group’s name was changed to the Council of Governments and its charge broadened to represent all of the valley’s cities on planning and economic development issues at the regional, state and federal level.

One example: The council commissioned its own subregional plan document as input into the regional planning document of the Southern California Assn. of Governments, to ensure that valley communities had a voice in setting priorities on dealing with air pollution, water quality, transportation and other issues.

“We need to think about the region, and not necessarily about our own individual cities,” says council President Terry Dipple, who is also mayor of San Dimas. “We’re all concerned about our budgets and services to our own residents . . . but we have to keep in mind that . . . in order to have healthy cities, we have to have a healthy region.”

To be sure, the valley did not escape the four-year recession. As in the rest of Southern California, plants closed and jobs moved out of state.

Hughes Missile Systems Co. is closing one of the east San Gabriel Valley’s largest employers, the Navy-owned Pomona missile plant formerly operated by General Dynamics’ missile subsidiary, which was acquired by Hughes in 1992.

The plant, which at its peak in 1987 employed 9,500 people, now has a skeleton crew of 200 and will close completely by the end of the year. Its operations have been consolidated with other Hughes production in Tucson, mainly to cut costs.

Connecticut-based air-conditioner maker Carrier Corp. shut down its 35-year-old plant in Industry in 1993 and consolidated production in its Tyler, Tex., factory. Most of the plant’s 400 workers were laid off. Again, the reason was to cut costs, as well as to find a plant with more production space and proximity to key markets in Florida and Texas, spokeswoman Sharon Stensaas said.

The San Gabriel Valley also still has pockets of poverty. Though the valley’s median income of $38,931 is slightly higher than Los Angeles County’s $34,965, according to census data, seven valley cities have a higher percentage of their population below the poverty level than the county as a whole.

Still, the valley fared better during the recession than the rest of the region, according to a preliminary study by Azusa Pacific University for the San Gabriel Valley Commerce and Cities Consortium.

Twenty-three of the valley’s 31 communities had unemployment rates lower than the county’s 10.1% rate in June, according to the state Employment Development Department.

And economists say the valley has suffered less from defense cuts than the rest of Southern California. The San Gabriel Valley, with roughly 14% of the county’s jobs, had only 6.2% of the county’s high-tech industry in 1990, the latest year for such figures, the Azusa Pacific study found.

“We did probably just about as badly . . . in the last four years in the manufacturing sectors and construction” as the rest of the county, said Roger B. Conover, director of the San Gabriel Valley Economic Project at Azusa Pacific. “But because we have fewer high-tech job losses, we probably did do better than the county as a whole.”

In the meantime, the valley has managed to attract its share of new businesses and industry.

Monrovia is proving itself an emerging center for the fledgling electric vehicle industry. It is the new home of auto component maker Amerigon, formerly based in Burbank and a member of the Calstart consortium that is trying to create a new state electric car industry.

It is also the headquarters of AeroVironment, the environmental testing, engineering and research firm that helped create General Motors Corp.’s prototype Impact electric passenger car.

AeroVironment is also designing high-tech, solar-powered unmanned aircraft, based in part on technology from its human-powered Gossamer Condor and Gossamer Albatross planes.

The 150-employee firm, co- founded by aviation pioneer Paul McCready in 1971, owes its location in part to the proximity to Caltech and its experts. Moreover, “we do quite a bit of environmental consulting, and so both from a customer base and for just access to the rest of the Southern California area, it’s easy,” President Timothy E. Conver said.

“It’s easy for us to attract the kind of technical, scientific, technician and office support type people who are employed in the company,” he said.

For its part, Snak King, a Pico Rivera-based maker of snack foods, is typical of the light manufacturing that is a mainstay of jobs in the valley.

Snak King is opening a 140,000-square-foot manufacturing and distribution plant that will employ about 100 workers, most of whom will move from other area plants. “We want to keep close to our employee base and the central distribution access to Los Angeles, the Inland Empire and Orange County,” President Barry Levin said.

The southeast San Gabriel Valley, meanwhile, remains a magnet for Asian investment, though the real estate frenzy of the 1980s has cooled after transforming communities in Monterey Park, Alhambra and, more recently, Hacienda Heights, Rowland Heights and other east valley cities into largely Chinese American enclaves.

One big change: Taiwanese and Hong Kong money is being replaced by investments from mainland China. Estimates of mainland Chinese investment in the valley run as high as $100 million.

Monterey Park, whose population is more than half Asian American, is the likely center for a warehousing or shopping center development by its sister city of Quanzhou in China’s Fujian province, Mayor Judy Chu said.

It won’t be the first investment of its kind. In 1992, the US China Travel Service, which has ties with the mainland Chinese government and coordinates trade with that nation, bought a four-story, 12,000-square-foot building at Atlantic Boulevard and Garvey Avenue in Monterey Park for $2.18 million, said Xin Liang Pan, the company’s managing director and general manager in San Francisco.

The service has invested heavily in the United States, including a $1.85-million, four-story, 30,000-square-foot building in the Union Square area of San Francisco and a $100-million stake in a China-themed amusement park in Florida, Pan said.

Meanwhile, the China Press, a Chinese-language newspaper that focuses its coverage on the mainland and circulates in San Francisco and Los Angeles, bought a 32,000-square-foot building on Mission Road in Alhambra in May for $2.15 million to house editorial offices and the China Center, a venue for trade and cultural exchange and exhibitions, Chairman Yining Xie said. The building is scheduled to open in October.

Xie is a native of Guangdong in China and has been in the United States for eight years. He was once White House correspondent for the China News Service.

He says his firm has no ties with the Chinese government, but he stresses the importance of economic ties between overseas Chinese in Southern California and the mainland. “We see a very bright future,” he says.

John Judabong, the Thailand-born export manager for Oceanland Service Inc., an export-import company in Rosemead, says that trade with mainland China is on the upswing.

“China has a lot of U.S. dollars because they import a lot of goods to the U.S., and now they’re getting used to an Americanized way of living and want to improve their living standards,” he says.

“Also, a lot of new companies are opening up in China, and they are required to upgrade their offices or buy cars. . . . There will be a greater demand for U.S. goods as they become more integrated economically with the world.”

The increasing foreign trade and immigration is making the San Gabriel Valley, like the rest of Southern California, a stew of cultures and ethnicities. Its ethnic mix--39% white, 38% Latino, 17% Asian and 6% black, according to 1990 census figures--is slightly more diverse than the rest of the county.

For a business, the ethnic mix can be a blessing. AT&T; has had a major sales and marketing operation in Monterey Park for the last six years, specifically to keep an eye on what Vice President Morley Winograd calls the “future markets of Los Angeles.”

“As the growing ethnic and minority-owned business expands in the markets we care about . . . this allows us to be very close to that marketplace,” he said. “Hispanic, Asian, African-American and women-owned businesses . . . make up some of the fastest-growing segments we have in our mix of customers for business telephone services.”

San Gabriel Valley Jobs

Most of the 31 cities of the San Gabriel Valley have unemployment rates lower than that of Los Angeles County as a whole. Of the 10 largest cities, six were below the average for June. Unemployment rates for selected cities:

Alhambra: 8.3% Arcadia: 5.0 Baldwin Park: 11.5 Diamond Bar: 4.9 El Monte: 12.8 Monterey Park: 8.5 Pasadena: 8.7 Pomona: 12.4 Rosemead: 11.5 West Covina: 6.9 Los Angeles County: 10.1

Source: Employment Development Department