Los Angeles: Economy
Major Industries and Commercial Activity
California has always been known as an "incubator" of new ideas, new products and entrepreneurial spirit. Southern California has led the way in celebrating and nurturing that spirit. The people, institutions of knowledge, great climate and infrastructure have enabled the Los Angeles region to emerge as a leading business, trade and cultural center—a creative capital for the twenty-first century. The city is the largest manufacturing center in the West, one of the world's busiest ports, a major financial and banking center, and the largest retail market in the United States.
Los Angeles is the largest major manufacturing center in the United States, with 500,000 workers in manufacturing activities in 2003. The largest components are apparel (68,300 jobs), computer and electronic products (60,000 jobs), transportation products (54,600 jobs), fabricated metal products (49,900 jobs), food products (44,800 jobs), and furniture (27,400 jobs). The last few years have witnessed major economic expansion. The three-tiered, traditional economy (aerospace, entertainment, and tourism) has evolved into a well balanced, multi-tiered economic engine driven by unparalleled access to world markets.
Steel fabrication is the second largest industry in manufacturing, followed closely by fashion apparel. In the United States, only Detroit produces more automobiles than the Los Angeles area, a fitting statistic for the city with more cars per capita than any other in the world. The "big three" U.S. auto manufacturers, along with Honda, Mazda, Nissan, Toyota, Volkswagen, and Volvo, have all located design centers in Los Angeles. The manufacture of heavy machinery for the agricultural, construction, mining, and oil industries contributes significantly to the local economy. Los Angeles is also a major producer of furniture and fixtures, as well as petroleum products and chemicals, print material, rubber goods, electronic equipment, and glass, pottery, ceramics, and cement products.
Los Angeles is the nation's largest port in terms of value of goods handled and tonnage. Proximity to the major Pacific manufacturing nations—Japan, Korea, and Taiwan—and easy access to transcontinental rail and truck shipping, plus the large commercial facilities available at Los Angeles International Airport make the Los Angeles Customs District the largest in the nation. The city's prominence in international trade is evidenced by the nearly 50 U.S. headquarters of foreign companies located in the area.
The banking and finance industry in Los Angeles is one of the largest in the United States. More than 100 foreign and countless domestic banks operate branches in Los Angeles, along with many financial law firms and investment banks. Entertainment, in the form of film, television, and music production, is the best known industry in Los Angeles, focusing worldwide attention on the city and making Los Angeles a major tourist destination. Tourism employs more than 468,000 people in the entire metropolitan area.
Other prominent industries in the Los Angeles area include health services, education, high-technology research and development, professional fields such as architecture and engineering, and a large construction business, both commercial and residential.
Items and goods produced: agricultural and seafood products, aircraft and aircraft parts, furniture fixtures, ordnance missiles, electrical and electronic equipment, stone, clay, glass, apparel, textiles, toys, fabricated metals, rubber, plastic, motion pictures, petroleum, coal
Incentive Programs—New and Existing Companies
LA's Business Team, part of the Mayor's Office of Economic Development, is a one-stop shop for business developers. Through strategic industry and government alliances, the Business Team links businesses to a network of opportunities including financing, tax incentives, real estate, low-interest loans, job training programs, permits, and more. It is also working to develop emerging industries in Los Angeles, such as the environmental technology and biomedical industries. The Team will even cross jurisdictional lines to open doors for businesses at the federal, state, and country levels. Financial incentives are available in Federal Empowerment Zones, State Enterprise Zones, and City Tax Free Zones. Businesses wishing to expand or locate in Greater Los Angeles will find assistance through the Los Angeles County Economic Development Corporation.
Six business tax reforms were signed into law by the mayor in late 2001. These are designed to enhance the fairness of city tax laws by bringing more businesses into compliance while providing expedited and fair methods to settle tax disputes and assessments. To encourage local entrepreneurs, he has proposed exempting small start-up businesses from paying business taxes for their first two years of operation. The mayor's office also hosted a biomedical industry roundtable with more than twenty biomedical community leaders to discuss action the city can take to make Los Angeles more attractive to the industry.
Small- or medium-sized business may be eligible for technical assistance at one of the six Los Angeles Business Assistance Centers (BACs). The centers are operated by community based organizations and/or local colleges and universities and are funded by the City of Los Angeles Industrial and Commercial Development Division (ICD). Assistance is provided through a combination of in-house counselors, school faculty and private business professionals.
A variety of programs administered by state and federal sources are available to Los Angeles businesses. Those include: Manufacturers' Investment Credit, Partial Sales of Use Tax Exemption, In-Lieu Sales or Use Tax Refund, Research & Development Tax Credit, Net Operating Loss Carryover, Foreign Trade Zones, Recycling Market Development Zone, Childcare Tax Credit, Work Opportunity Tax Credit, Enterprise Zones, and others.
Job training programs
Private Industry Council (PIC) members appointed by the mayor encourage economic development through job training. The PIC works cooperatively with the Los Angeles City Council, Mayor's Office of Economic Development, Community Development Department, and California Employment Development Department to arrange for customized job hiring, recruiting, training, and retraining programs.
Greater Los Angeles was bustling with construction activity at the turn of the century. The Los Angeles downtown area has undergone a renaissance, with new museums, entertainment centers, sports venues, and more. Among the many projects were the Walt Disney Concert Hall, the new home of the Los Angeles Philharmonic since the 2002-2003 concert season, and the New Catholic Cathedral, a $189 million Mother Church for the Archdiocese of Los Angeles that was completed in 2002. Los Angeles Center Studios, a $105 million project described as the largest full-service independent film studio to be developed since the 1920s, began an expansion at the end of 2002 that added 900,000 square feet, including a full-service commissary, additional offices and meeting rooms, and eight additional stages.
Hollywood is being refurbished as well, with the famous Mann's Chinese Theatre having undergone a major renovation. A new shopping, dining, and entertainment center located in the heart of Hollywood is designed to mirror a 1916 classic movie set. The five-story, open-air complex, called Hollywood and Highland, includes the Renaissance Hollywood Hotel, more than 60 specialty shops, public art exhibitions, six movie screens, restaurants, nightclubs, and the Kodak Theatre.
Economic Development Information: LA's Business Team, telephone (800)472-2278; email firstname.lastname@example.org. Los Angeles County Economic Development Corporation, 515 South Flower Street, 32nd Floor, Los Angeles, CA 90071; telephone (888)452-3321; fax (213)622-7100; email email@example.com
International trade is a major component of the Los Angeles area economy. The Los Angeles Customs District (including the ports of Long Beach and Los Angeles, Port Hueneme, and Los Angeles International Airport) is the nation's largest, based on value of two-way trade. In 2003, this totaled $235 billion. Import and export shipping through Los Angeles International Airport (LAX) is expected to jump 140 percent by 2015. With its increasingly expanding air cargo system, LAX is set for major expansion in 2006. Several major transcontinental rail systems, used by a number of rail shipping companies, terminate in Los Angeles. The Alameda Corridor, a $2.4-billion, high-speed cargo rail system linked to the Port of Los Angeles and completed in 2002, will make it even easier to ship products across the globe. All of the major interstate truck companies maintain large facilities in the metropolitan area.
Labor Force and Employment Outlook
Los Angeles offers a diverse employment pool, with a wide range of schooling and skills. A large number of immigrants—international, national, and regional—provide a steady source of labor with strong links to important trading partners like Mexico and Asia. With Los Angeles International Airport serving as the so-called new Ellis Island for foreign immigration to this country, the metropolitan region has achieved a new ethnic and cultural diversity in its workforce.
Services, wholesale and retail trade, manufacturing, government, financial service industries, transportation, utilities, and construction contribute significantly to local employment. The County of Los Angeles is the top ranked county in manufacturing in the united States.
By the end of the 1990s biotechnology emerged as one of California's largest employers at 210,000 jobs, surpassing such traditional strongholds as aerospace and the entertainment industry. Greater Los Angeles already is home to significant biotech manufacturing. More than 2,500 companies in Southern California make pharmaceuticals and other medical products. Other major industries showing growth at the start of the twenty-first century are international trade and tourism.
The following is a summary of data regarding the Los Angeles-Long Beach metropolitan area nonagricultural labor force, 2004 annual averages.
Size of nonagricultural labor force: 3,992,100
Number of workers employed in . . .
natural resources and mining: 3,800
trade, transportation, and utilities: 780,100
financial activities: 243,200
professional and business services: 561,000
educational and health services: 467,600
leisure and hospitality: 373,100
other services: 144,800
Average hourly earnings of production workers employed in manufacturing: $18.67
Unemployment rate: 5.8% (January 2004)
Cost of Living
Living costs in the metropolitan area are significantly higher than the national average.
The following is a summary of data regarding key cost of living factors for the Los Angeles area.
2004 (3rd Quarter) ACCRA Average House Price: $704,500
2004 (3rd Quarter) ACCRA Cost of Living Index: 155.8 (U.S. average = 100.0)
State income tax rate: Ranges from 1.0% to 9.3%
State sales tax rate: 6.0% (food and prescription drugs are exempt)
Local income tax rate: None
Local sales tax rate: 1.25%
Property tax rate: Varies according to location
Economic Information: Los Angeles Area Chamber of Commerce, 350 South Bixel Street, PO Box 3696, Los Angeles, CA 90051-1696; telephone (213)580-7500; fax (213)580-7511
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