Future of Southern California Economy is About More Than Just Sunshine

Yesterday's announcement that Northrop Grumman will be moving its corporate headquarters to the Washington, D.C. area in summer 2011 is one more reminder (as if we needed another) that sunshine and population base are no longer enough to keep corporate headquarters in Los Angeles and Southern California. As Northrop and other firms have noted over the years, the location of key customers, a change in ownership or leadership, and the cost of doing business are all major factors when it comes to a business decision regarding location and relocation.

As has been noted in every national news story about this announcement, Northrop is the last aerospace company headquartered in Southern California and one of its major customers is the U.S. government. The company's strategy is to be closer to its major customer by moving its headquarters and 300 of its 30,000 employees located in California to the Washington, D.C. area. Yes, it makes sense and yes, it is still a blow to the pride and the economy of Southern California.

So what can we learn from this decision?

• Northrop still has about 30,000 employees in California and 21,000 of those employees are in L.A. County. The goal of every city in L.A. County should be to keep these jobs here.

• Northrop has 3,700 suppliers in L.A. County and the goal of every city in L.A. County should be to help these suppliers remain competitive in serving Northrop and its other customers.

• Northrop has 500 job openings today in L.A. County and we should be sending our talented friends and neighbors their way.

As I have said many times in this blog, sunshine and a wonderful climate do not guarantee a strong economy. Building a strong economy is work — hard work — and it only happens when elected officials and the community as a whole value new jobs as the cornerstone for a higher quality of life for every citizen, young and old. And that includes people who already have good jobs and retired people who are no longer looking for jobs.

There are geographical assets and liabilities that a community can do nothing about. There are national and international trends that a community can do nothing about. But every community can do something about the priority it places on the creation of new jobs. And every community can show its appreciation and respect for their businesses that employ people and pay the taxes that sustain the quality of life in the community.

We can wring our hands about the loss of Northrop's headquarters, or we can do everything possible to build on the 21,000 Northrop jobs that still exist in L.A. County. We can ignore this decision as inevitable or inconsequential, or we can show our appreciation to every other employer in L.A. County and pledge to help them grow and prosper in the future.

The choice is ours. And our answer will have more to do with the future economy of Southern California than the weather.

And that's The Business Perspective.