Zen and the Art of Economic Engine Maintenance Concentration: Valencia Gateway has attracted 1,200 businesses. By SHELLY GARCIA Senior Reporter What drives the economy? To be sure, it is employment, paychecks that fuel consumer spending, which in turn pumps money back into the economy. But the idea of lifetime employment has gone the way of the buggy whip. Across the country, payrolls at large corporations have been declining. Hundreds of thousands of jobs generated by the dot-com boom have disappeared. A big payroll alone doesn’t cut it anymore; just ask any of the 20,000 workers caught in the Enron debacle. “Business is about generating numbers,” said Thomas I. White, Hilton professor of business ethics and director of the Center for Ethics and Business at Loyola Marymount University, “but it’s also about recognizing that people’s employment is based on this. The economic vitality of communities is based on this, and a very basic sense of ethics requires you to say, ‘If my actions are going to have a significant impact, I have to take that into account.'” To White, economic engines are companies that are part of their communities. They identify real needs, fill them using responsible strategies and report their results with honesty and integrity. Others say an economic engine needn’t be a company at all. It might be a labor pool of skilled workers, a cluster of educational institutions that train a workforce or a place that draws residents and, as a result, attracts business. “Business will come to an attractive environment because it wants to recruit good people,” said Daniel Blake, director of the San Fernando Valley Economic Research Center at Cal State Northridge. Valencia Gateway attracted many of its 1,200 current businesses because its developer, Newhall Land and Farming Co., offered not just sites to locate factories, R & D; and office facilities, but because it also offered a community of skilled residents that could staff those facilities. To date, those businesses employ 40,000 workers and job opportunities at Valencia Gateway are, in turn, fueling home sales at Stevenson Ranch at a rate of eight or nine a week. At the most basic level, economic engines fill needs the larger the market for that need, the more revenue produced and the more workers employed. Westlake Village-based Dole Food Co., the No. 1 banana brand in North America, with $4.5 billion in annual volume and 59,000 employees worldwide, fills one of the most basic of needs food. Kaiser Permanente Medical Group in Panorama City and Woodland Hills, the Valley’s largest private employer with 5,300 workers and 800,000 HMO members, is another case in point. But large, established companies, the kinds that employ the most workers and leave the largest footprints in their communities, are not always the most efficient engines for a locale. “Large corporations in the United States and the world have lost jobs for the last 15 years, and the economic driver in the U.S. has been job creation by new, fast-growing companies,” said Bill Cockrum, finance professor at UCLA’s Anderson School of Management. “Corporations get rigid, ossified, bureaucratic. Once they do, they stop being entrepreneurial. They stop taking risks. They worry about resources instead of opportunities.” Entrepreneurial companies, by comparison, operate in emerging markets where demand is on the rise. Their focus is on identifying opportunities and meeting needs, not cutting costs. Such companies have dominated the landscape of the Valley since the departure of the aerospace and defense industries in the last decade. Indeed, today’s Valley is driven by a diverse group of small and mid-sized businesses that, when combined, generate a far greater number of jobs than any of the behemoths can muster individually. According to data from Info USA, provided by CSUN’s Economic Research Center, 62,209 of the Valley’s total of 65,665 businesses, each employs less than 50 workers. Smaller companies are more likely to become the kinds of innovators that can move the economy forward, especially the current one struggling with too much supply and too little demand. “What’s going to be needed is something that’s a real productivity developer outside what we already have now,” said Gerald Celente, an author, trend forecaster and director of The Trends Research Institute in Rhinebeck, N.Y. “That means outside of retail, auto, technology as we know it. You need new inventions. It has to be a wild card. It may come through the entrepreneurial (sector), but only if it’s something new and really different.” Some of those innovations are underway in the Valley. Amgen Inc.’s Epogen is the first drug of its kind to treat anemia. IPC-The Hospitalist Co. is on the cutting edge of a new medical subspecialty that, in the early going at least, has been found to save money and improve care. The 10 gigabit Ethernet, under development at companies such as Vitesse Semiconductor and Internet Machines Inc., is a next-generation communications technology. Engines that produce a skilled labor force can often outlive the industries that created them, as happened when the Valley’s economy shifted from aerospace and defense. Those industries left behind a trained labor force that became the engine that fueled the emergence of the 101 Technology Corridor and the multi-media industry. “So, part of what happened in the 1990s as the Cold War ended and the demand for aerospace declined (is that) other businesses took up the slack,” Blake said. “When an industry subsides, usually something will replace it if you have a rich, diverse, skilled labor base in the area.”