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TOUGHING IT OUT : Blue-Collar Firms Caught in Vise of Price Squeeze

November 16, 1986|GREG LUCAS | Greg Lucas is a free-lance writer

A lot of workers in Orange County don't don white paper gowns and gloves or walk through six air locks to get to their work station. They slide open a corrugated aluminium door, stroll across a stained and debris-strewn concrete floor, sidle up to their stamping press and get dirty.

Despite a national reputation as a booming center of high-tech growth, a service economy poised for greatness on the edge of the Pacific Rim, Orange County still supports a sizable number of heavy manufacturers.

There are at least 34 aluminium, brass or steel foundries in the county, several blast furnaces and more than 100 metal-stamping, tool-and-die and sheet-metal shops. Companies with as few as six to as many as 1,000 employees make doorknobs, washers, heavy pipe, hoists, cranes, farm equipment. There are even a few companies in the county that make bullets.

It's a dirty job, creating everything from sewer grates to titanium rivets for jet fighters, but people are doing it.

The question is: for how long?

Many manufacturers came to Orange County before the urbanization and growth of the last 15 years. Attracted by cheap land, room to grow and a life style envied in many parts of the world, the manufacturers set up their factories and assembly lines, pushing back the orange groves that were the first of the county's low-tech industries.

Today, industrial manufacturers are toughing it out in a much different Orange County.

Real estate prices are high; flat, open space is hard to come by, and the blue-collar work force is increasingly moving to more affordable Riverside and San Bernardino counties.

At one time, the Holly Sugar Corp.'s yellow brick factory on Dyer Road in Santa Ana was surrounded by 50,000 acres of sugar beet fields. But in 1983, after several years of losses, the company faced reality--it was more profitable to sell the remaining 20 acres its factory sat on for $8.5 million than keep operating.

Now, the Holly factory is gone. The busy interchange of the Costa Mesa Freeway and Dyer Road is dominated by the Orange County Technology Center, a $46-million research and development office complex completed in 1984.

Those low-tech companies that remain do so despite dramatically increased land and housing costs that have transformed the available labor force into one that is predominantly white-collar. As one manufacturing consultant said, "Where can somebody who makes $5 to $8 an hour live?"

The long-term business plans of several of the county's remaining large factories include relocating outside the county. Some firms plan to move because of high land and labor costs, others cite pressure from the cities that once welcomed them. Cities now want to replace the sprawling one- to two-story factories with cleaner businesses that generate more taxes: commercial high-rise buildings, office parks, shopping centers and research and development-oriented light industry.

Toxic waste disposal requirements, ever more stringent air quality requirements, emission restrictions, increasing energy costs, all contribute to the shrinking fortunes of the county's smoke-stack industries.

"There's a point at which a manufacturer in Orange County will say, 'Forget it pal, we're just not going to do business here,' " said Tom Ellick, president of the California Manufacturers Assn. and a former vice president at Fluor Corp. in Irvine.

"Look at land costs" in the county said Ellick, who lived in Orange County for 16 years before moving to Sacramento to take the CMA post. "Labor is certainly not inexpensive. The airport and the freeways are a disaster. Add that to the other costs of doing business, and unless Orange County starts reversing what's reversible, there will be a shift out of the county to the Central Valley, where you have all the things Orange County used to have."

Combined with strong foreign and domestic competition and increases in material costs, the battle that manufacturers must wage for survival is a grim one, but not hopeless.

Some Optimism

Some of the county's heavy manufacturers plan to stay. Hyatt Die Cast & Engineering in Cypress moved to Orange County in 1969. It rejects the notion that the county's heavy manufacturers are doomed to extinction, said Frances Moor, Hyatt's controller.

"We can still maintain land here . . . and still make a profit with the product we deal in," she said.

In fact, some industrial firms are even seeing business improve because the same high-tech companies that are supplanting them need metal working firms to craft the frames for the computers and because the finished computer systems are helping some manufacturers become more cost efficient.

Still, the older smokestack companies must learn to cope with a virtual inability to expand in the county.

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