Business in the San Fernando Valley couldn’t be better, according to a report released by Cal State Northridge. But L.A. County’s top economist said an over-reliance on the entertainment industry and some other nagging problems could cause trouble in the future. “Be ready for the unexpected,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp., at a daylong Valley economic forecast session sponsored by the Valley Industry & Commerce Association. “Be cautious,” he went on, “but don’t be delusional.” Kyser was among several at the conference who spoke to the need for the Valley to nurture a diversified economy, one made up of more than just the entertainment and retail industries. “We are over-exposed in entertainment,” Kyser said. He predicted that if the entertainment industry is greatly affected by a possible writers’ and actors’ strike in 2001, the rest of the world would characterize L.A. as a one-industry town. “To that, we need to say, ‘Hell no,’ Kyser said.” The motion picture and television production industry employs more than 100,000 workers with an annual payroll of $6.15 billion, accounting for 15.7 percent of the Valley’s workforce and almost 25 percent of its total personal income, according to the “Report on Findings on the San Fernando Valley Economy 2000-2001.” Entertainment-sector employment was up more than 10 percent in 1999 after remaining flat the previous two years, according to the CSUN report. The movie/TV production sector’s total Valley payroll (103,194 workers) was only exceeded by that of the retail sector (113,699 workers). Technology-based manufacturing was the Valley’s third-largest source of employment, providing 51,217 jobs. While the number of days of location filming in all of Los Angeles changed little in the last two years (about 38,000 each year), days of filming in the Valley jumped from 6,907 in 1998-99 to 10,251 in 1999-2000. “You can see the huge footprint the entertainment industry has in the Valley,” said Shirley Svorny, director of the San Fernando Valley Economic Research Center at CSUN. Preparing for strike Much of the recent activity in film and TV production could be attributed to studios and production companies “stocking up” on product in anticipation of expected strikes in 2001. In fact, according to Kyser, even if entertainment industry strikes are averted, the sector won’t have another year like this one for some time. Even if all those scripts, movies and TV shows aren’t used during a strike, they’ll be available anyway meaning today’s hectic production schedule will cool down, no matter what. But there are several reasons for optimism, the report found. -A 3.8-percent increase in private-sector jobs for the Valley in the last year, more than double the countywide increase of 1.8 percent. -Building permits totaling $535 million in the last year. -An office vacancy rate of just over 9 percent, less than half the 22 percent rate in downtown Los Angeles. A few persistent problems, however, could dampen future expansion in the Valley. There’s increased freeway traffic congestion, fueled in great part by the increased employment activity in the Valley. That could slow future expansion. In the last six years, the infamous 101/405 interchange has seen a 12.5-percent increase in north-south traffic on the 405 and 18.5 percent on the east-west 101.) Other constraints Then there’s the lack of access to rail and port facilities, anticipated utility cost hikes and a quickly diminishing inventory of industrial and office space. “We’ve used up most of the available space we have,” said Daniel Blake, a CSUN economics professor and a principal author of the report. In fact, vacancy rates for commercial space are just over 4 percent, down from just over 9 percent in 1996. Blake noted that the Valley has survived the great blows to the economy it suffered in the 1990s and now must again move on. “The recovery is complete,” he said. “We can ask now, ‘What kind of growth do we want to have?'” Almost every speaker at the conference from Mayor Richard Riordan to Kyser and Hollywood Reporter publisher Bob Dowling expressed concern about what they called workforce quality, the ability to deliver qualified employees. “It’s at every level,” Kyser said. While unemployment insurance claims are lower than they’ve been since the Northridge earthquake, Valley businesses still go begging for qualified employees. “That’s going to be our Achilles’ heel,” Kyser said.
ECONOMY—Entertainment Dominance May Cause Instability