Economic Restructuring in Long Beach : Opportunities and Challenges in a Post-Aerospace Economy

The City of Long Beach and other centers of aerospace production that reaped the rewards of the 1980s defense-spending boom must now confront the realities of restructuring. Since World War II, the Douglas Aircraft plant made Long Beach an important center of the US aerospace industry and dominated the local economy. In 1992, the Long Beach aerospace industry employed 36, I00 workers, which was 22 percent of the city's total employment. Almost all of these workers were employed by McDonnell Douglas. Long Beach aerospace workers earned a total payroll of over $1.5 billion, which was 30 percent of the city's total payroll.As a result of defense cutbacks, aerospace companies have restructured their operations through mergers, divestitures, plant closings, and layoffs. Since 1991, McDonnell Douglas has laid off close to 26,000 workers in Long Beach and shifted a significant part of its military production to St. Louis.We recommend that the City of Long Beach reinforce and improve existing specializations in international trade and health services, while working to retain a presence in the restructured aerospace industry. Firms in the electronic equipment industry should be attracted to Long Beach to help diversify the local high technology sector. The city should capitalize on the locational and logistical advantages created by the port and the Alameda Corridor project to target firms in other durables manufacturing industries such as motor vehicles and equipment, due to their relatively good wages and high employment multipliers. Finally, the City should attract firms in professional and high technology services industries that pay average to above average wages and are experiencing considerable growth