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The Valley’s Ink Blot Economy

Let’s call the sudden departure of Superior Industries International Inc. the latest economic Rorschach test for worriers about the Valley’s and L.A.’s economic future. Or perhaps, it’s simply destined to become just another political football for critics of L.A.’s high costs and regulatory burdens? The maker of aluminum wheels, founded some 60 years ago in Van Nuys, nearly slipped out of town without any announcement for a suburb of Detroit. (See article on page one.) Which leads to the question: What company in their right mind would want to leave sunny SoCal for a Rust Belt region where you literally can buy abandoned homes for a few hundred dollars? Well, an automobile-industry manufacturer, of course. When Superior opened for business in 1957 as an automobile accessories maker, Los Angeles was not only the biggest car market in the country, but it was still home to several automobile plants, including GM’s in Van Nuys. Ancient history, of course. The GM plant closed in 1992 and is now, as is so typical, the site of a shopping mall. And some of the same forces that led to the auto plant closure also prompted Superior over the years to move production out of high-cost California to lower labor-cost states such as Arkansas. More recently, it moved production to the even lower-cost Mexican city of Chihuahua, where it opened its fourth plant last year. It didn’t really have much of a choice. It was battling cheaper Asian imports. And analysts have criticized its relatively high per-unit costs and weak financial performance, which has led to ongoing proxy battles with New York investor Mario Gabelli. He wants a new board slate. So that left Superior with about 50 managerial and administrative workers separated by thousands of miles from both its plant and its biggest customers, the big Detroit automakers. The coup de grace was likely the hiring last year of former auto industry executive Don Stebbins as its chief executive. He apparently lived in Michigan and wasn’t moving. Given all those facts, the Rorschach response might be to accept Superior’s statements that, in essence, the move was a strategic one led by its desire to be closer to its core customers. But there are some troubling details. Namely, Superior acknowledged being aggressively wooed by the state of Michigan, which gave nearly $1 million to offset its relocation expenses. Gone are 50 good-paying local jobs in the process. And then our reporter, Mark Madler, discovered that apparently no one whose job it is to attract and retain business in the Valley knew that the company might depart. Call me crazy, but Superior isn’t exactly a low-profile company. It’s publicly traded and has been in a proxy war over its financial performance. It’s moved factories to foreign lands. Maybe the headquarters was next. Maybe someone should have checked in with management? So you see the problems with economic Rorschach tests. Look at one set of facts and come to one conclusion. Look at another and suddenly doubts set in. And that’s understandable given how the modern economy is a maelstrom. Los Angeles lost a far bigger company when Northrop Grumman Corp. moved from Century City to Falls Church, Va. in 2011. The defense contractor cited its need to be closer to its primary customer: the federal government. And that was despite Northrop having a navigation systems operation in Woodland Hills and an aircraft production and maintenance facility in Palmdale. Or consider last year’s departure of Occidental Petroleum Corp. from its longtime headquarters in Westwood for Houston. It’s a company that dates all the way back to 1920 and was built upon the recovery of California oil – that was until Armand Hammer expanded its operations worldwide in the 1960s. By last year, it decided its local oil assets weren’t enough to keep it in Los Angeles and off it went to the energy capital of the nation in Texas, where its Permian Basin holdings have been revitalized by the fracking revolution. Ironically, the Valley benefited from that move. Occidental spun off its California assets into California Resources Corp., which after looking around for its own headquarters, settled on Chatsworth. Call it a net loss for L.A. – but a gain for the Valley. Now there’s an ink blot you can see two ways.

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