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Charities Among Victims of L.A. Corporate Pullouts : Business: Firms' headquarters tend to focus locally. Moves and mergers eliminate both jobs and major donors.

October 24, 1995|MICHAEL A. HILTZIK | TIMES STAFF WRITER

When Security Pacific National Bank reigned as the largest financial institution headquartered in Los Angeles, local philanthropies reveled in its reflected glory: The community-minded corporation contributed an estimated $7 million to $10 million a year to Los Angeles-based charities.

Then came Security Pacific's 1992 takeover by the parent of Bank of America. Today, San Francisco-based Bank of America remains a generous contributor to nonprofit organizations around the region, but not on Security Pacific's scale: Bank of America's 1994 charitable budget of $24 million, covering 10 Western states, includes $4 million for recipients in Los Angeles County.

The Security Pacific case shows just one side of what happens when a community loses a major corporate headquarters. It's a phenomenon that has struck Los Angeles again and again over the last 10 years, as mergers, selloffs and business failures have, in the opinion of many local leaders, impoverished the city and county's business community.

"This community is still feeling the aftereffects of the Security Pacific merger," said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

Now history may be repeating itself. San Francisco-based Wells Fargo Bank's nearly $11-billion bid for First Interstate Bank means that First Interstate, which assumed Security Pacific's mantle as Southern California's largest financial institution, is very likely to disappear as an independent Los Angeles-based entity.

First Interstate would thus join a long list of banks, airlines, oil companies, aerospace companies, retailers and others whose headquarters have vanished from the local scene.

"We have a very short list of major business presences," said Daniel Flaming, president of the Economic Roundtable, a nonprofit Los Angeles-based business group. Not many years ago, Flaming recalls, the group could summon 30 locally based corporate economists and chief executives to its regular meetings.

"Now that list is decimated," he said, with participation having shriveled to perhaps half that many.

Flaming and others suggest that the lack of a cadre of large mainstream corporate headquarters may contribute to Los Angeles' difficulties in coming to grips with its natural and social crises.

"There's an absence here of a center of gravity in the business community that can speak for business, lead it, or provide a civic identity in trying to address the community's problems," he said.

In truth, not all of the movement of corporate headquarters has been out of the Los Angeles area. Rockwell International, one of the region's largest employers, relocated to El Segundo from Pittsburgh in 1988 and subsequently consolidated its executive offices in Seal Beach. Los Angeles lost Carnation Co. when that food company was purchased by Switzerland-based Nestle in 1985--but Glendale gained the headquarters of Nestle U.S.A.

Other big companies, such as Burbank-based Walt Disney Co., have stayed and are expanding. Disney, for example, is acquiring New York-based Capital Cities/ABC, making the Los Angeles area the home of a major television network.

Moreover, this region has always boasted a larger population of entrepreneurial small- and medium-sized companies than large ones. These companies, in such industries as entertainment and technology, are adding jobs and vitality to the local economy.

"The business community here is not static," said Ray Remy, president of the Los Angeles Area Chamber of Commerce. "It's equally important to look at what's growing. L.A. has a lot of favorable things going on, even though in the near term they certainly don't replace what we're losing."

Moreover, Los Angeles' losses have paralleled what has happened in other large cities. In the 1970s and 1980s, New York City lost a string of major corporate headquarters to its suburbs and elsewhere as high taxes and a host of urban ills drove General Foods, Pepsico, American Airlines and other big companies away. The city stemmed the outflow only by offering costly tax breaks and other incentives.

But Southern California started with a smaller group of old-line industrial giants than New York, Chicago and heartland cities such as Cleveland and Pittsburgh. Thus, the dwindling of an already scanty corporate core may hurt more.

And while the growth of emerging entrepreneurial firms will offset some of the loss of big corporations, these smaller companies tend not to be involved in civic and philanthropic life until they are older and more established.

The decade-long shrinkage of Los Angeles' corporate world has many roots. One is the wave of consolidation that has hit two major local industries, finance and aerospace. Calabasas lost the headquarters of Lockheed Corp., for example, when that aerospace company merged last year with Martin Marietta and consolidated its headquarters staff in Bethesda, Md., where Martin was located.

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