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SPECIAL REPORT: High-Tech Workforce Lifts Companies Higher

The Business Journal’s list of largest manufacturers this year paints a picture of winners and losers. In the first category, companies such as Solid Concepts Inc. of Valencia, which was No. 20 last year, moved up two spots to No. 18 after it was acquired by a former competitor, Stratasys Ltd., to form one of the biggest contract 3-D printers in the world. The acquisition added 50 local employees and an additional 150 to the company’s seven other facilities across the country. Another manufacturer that had a good year was Bobrick Washroom Equipment Inc., which has made soap dispensers and restroom toilet partitions since 1906, back when the facilities were called “washrooms.” “We’ve seen healthy growth in our industry for the past year, after a four-year slump with the financial meltdown that set commercial construction way back,” said Douglas F. Morton, senior vice president of corporate development at Bobrick. So far, 2015 is shaping up to be an extremely good year, which could translate into new hires, he noted. And there will be room to accommodate those additional employees at the company’s new 100,000-square-foot headquarters in North Hollywood. After a half-century in four outdated industrial buildings about three blocks away, Bobrick moved into its build-to-suit facility at 6901 Tujunga Ave. last month, where it hosted Vice President Joe Biden when he was in town to support Los Angeles Mayor Eric Garcetti’s successful campaign to raise the city’s minimum wage. But on the other side of the equation is Nestle USA’s Hot Pockets manufacturing plant in Chatsworth. It was No. 14 on the Business Journal’s 2014 directory but it closed last summer, eliminating 360 local jobs. The Glendale-based unit of Swiss food giant Nestle SA had manufactured its Hot Pockets and Lean Pockets brands at the 9601 Canoga Ave. plant since 1988 but it moved its operations to an expanding facility it operates in Mount Sterling, Ky. Another food plant – this one operated by H.J. Heinz Co. – is expected to shut down its condiment and sauce plant in Chatsworth and lay off 145 employees sometime this summer. The Pittsburgh company is moving the work to factories in Mason, Ohio, or Jacksonville, Fla. Bigger picture The fortunes of these companies illustrate the larger story of which manufacturers tend to thrive in the San Fernando Valley. Those with skilled workforces relying on innovation and creative technology generally do better than many of the ones that rely on less-skilled, production-line jobs, such as those in the food industry. The trends illuminated by the Business Journal’s list fit with manufacturing industry research, said John Anderson, director of field operations at Torrance’s California Manufacturing Technology Consulting, a nonprofit manufacturing assistance center. For instance, a report commissioned by the CMTC last year showed that almost 169,000 manufacturing jobs were lost in California in the decade between 2002 and 2012. While Los Angeles County continues to be a manufacturing powerhouse, with more than 365,500 jobs in 2012, the aerospace products and parts sector that long dominated the Valley has lost considerable competitive strength in recent years. But Anderson tends to accentuate the positive, dismissing the naysayers who regularly announce the death of manufacturing in the state. “Even though employment in manufacturing has gone down, the productivity and output has gone up,” he said. “We have a mature, highly skilled workforce in an area with a good educational system where companies’ output is not disrupted by weather, like ice storms or hurricanes.” Aerospace turbulence Even the crucial aerospace sector is a story of wins and losses this year. Companies making plane components and parts still occupy about half of the spots on the Business Journal’s list. Some, such as Chatsworth-based NEO Tech, formerly known as Natel Engineering Co Inc., are thriving. NEO, which makes microelectronic components for aerospace and medical applications, invested about $1.7 million developing, purchasing and installing equipment for a high-tech, hands-free assembly line last year. It has grown through a series of acquisitions, adding about 20 local jobs and moving from No. 22 to No. 20 on the list. On the other hand, the Valley’s largest local manufacturer, Bethesda, Md.-based Lockheed Martin Corp., reduced the workforce at its Palmdale plant by about 600 jobs over the past year, though it stayed in the No. 1 spot on the list. Continuing a longtime trend, Valley manufacturers still get courted by out-of-state recruiters touting lower costs and less regulation, hoping to get them to relocate. It used to be that calls came primarily from Texas, but Lidia Gorko, chief executive at Alpha Aviation Components Inc. in North Hills, said over the past year she’s been contacted by individuals from Utah, Colorado and some East Coast states. She tells all of them she’s just not interested. “We are where we are because we’re close to our key customers. We require skilled employees because of the complexity of our work. Trying to find them somewhere else would not be worth it,” said Gorko, whose 37-employee company makes highly engineered, precision-machined parts and assemblies for aircraft. Yes, labor and business costs might be more expensive in Los Angeles than in many other markets, she said, but like every business owner, she takes those costs into account when she makes pricing calculations. And there’s another calculation she adds into the mix: “I just like living here.”

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