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SOUTH BAY / COVER STORY : Taking Control : With the embattled local economy still unsteady, residents look for ways to ensure their own job security and success.


Bob and Marianne Kelchner went to work at TRW in the 1980s with their minds focused on designing ballistic missiles or complicated radar systems--work requiring engineering degrees and high-level security clearances.

But for the past three years the couple have stained their hands with ink in the cramped quarters of their modest downtown Torrance print shop. They transformed their recreational Ford Bronco into a delivery van so they could ferry business cards and City Council campaign posters to customers.

They are among hundreds of South Bay aerospace workers whose jobs evaporated during the recession and who landed in positions with lower wages and fewer benefits. The Kelchners decided to invest in a small business so they would have more control over their own destiny--and might someday make as much money as they did in the aerospace industry.

"A lot of people were not willing to do this," Bob Kelchner says. "They figured they would just sit back and it would come to them. But that's not going to happen."

For the Record
Los Angeles Times Thursday March 30, 1995 Home Edition South Bay Part J Page 6 Zones Desk 2 inches; 36 words Type of Material: Correction
South Bay economy--A quote in the March 23 cover story on the South Bay economy was incorrectly attributed to Northrop Grumman employee Bob Finch. Lisa Tyler, a Northrop contract worker, said: "I don't care about pay. I care about, 'Will this job be around?' "

Business leaders, economists and politicians in other parts of Los Angeles County have proclaimed that the region's economy is on the rebound. But the South Bay was hit disproportionately hard by the loss of aerospace-related jobs--an estimated 80,000 positions in the past six years alone. So even though the Los Angeles County jobless rate dropped last month to 7.9%, from 8.9% in January, South Bay business leaders have doubts about how fast the recovery is taking hold locally.

"It may be recovering in some places, but it ain't recovering (here)," says Alan Schwartz, past president of the South Bay Assn. of Chambers of Commerce.

Says Mike Collins of Shorewood Realtors in Hermosa Beach: "It's the one-step-forward, two-steps-backward syndrome." Existing home sales jumped 17% in 1994, but the median prices of the homes fell 4%.

Office space is almost one-quarter vacant, more than Los Angeles County's overall vacancy rate of 19%. And aerospace giants are still cutting their payrolls. The most dramatic example is Northrop Grumman's decision in February to lay off 1,500 workers in Hawthorne and El Segundo after the Pentagon cut a missile program. That sent those who got pink slips searching elsewhere for the security that the giant firm once provided.

"I don't care about pay," says Bob Finch, a Northrop Grumman engineer and 40-year aerospace veteran who had just gotten the news that his job was cut. "I care about, 'Will this job be around?' "

It used to be that there were jobs aplenty in the area even when a company lost a contract. With a large pool of firms such as TRW Inc., Hughes Aircraft Co. and Rockwell International, a worker could just walk across the street to find work if a contract ended or was canceled.

"At the height (of the defense building boom), people could get laid off and go to the next company," says Mark Conley, 35, a mechanic on the Hornet fighter program at Northrop Grumman Corp. in El Segundo. "It was like a circle."

Not anymore. And the Pentagon and NASA cutbacks have created a "ripple effect" that affects subcontractors, machine shops, retail outlets, restaurants and mom-and-pop operations.

Earlier this month, Kaiser Permanente Harbor City Medical Center cut 95 positions. Among the reasons for the layoffs, officials said, is that fewer employees in the South Bay area are on medical plans.

When a major company cuts back, "we feel it right away," says Nick Bazos, owner of the Hairitage House, a hair styling and nail salon in Torrance. His shop, nestled in a storefront just off Hawthorne Boulevard, has seen business decline about 10% per year during the recession, he said.

"And, as far as this year," he said, "it looks worse."

June McKinley, a stylist who leases space at the shop, recently added a few new clients, but it hasn't helped her bottom line much. "They are spending the same amount, but they are stretching it. Like a perm. Instead of every four months, they will get one every six months."

The Comedy & Magic Club, a venerable South Bay nightspot, suffered its worst year since the late 1970s, when it was just opening. "There were times when I was really concerned," owner Mike Lacey says. "I would sit in the showroom, look around and say, 'What am I doing wrong here?' "

He says the only reason he survived is because top performers such as Jay Leno and Jerry Seinfeld appeared at much lower fees than they would command in Las Vegas. "The comics really stepped up to the plate," Lacey says.


South Bay business leaders have forged plans to replace the high-skill, high-wage jobs that the area has lost, but the results have come slowly.

In 1993, the South Bay captured a handful of federal contracts to help defense firms diversify into the commercial sector, but that government program is now in jeopardy as Congress tries to trim the budget.

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