The Genesis of Southern California's High-technology Industrial Complex

The empirical circumstances attending the birth of the aircraft industry in Southern California in the 1920s and 1930s represent a com-

plicated story and one that has hitherto not been well understood. Fortunately, the story has recently been recounted in great historical detail by Lotchin (1992) in his book Fortress California, 1910–1961 , and what follows runs, in part, parallel to his account.

In the very earliest phases of any industry's growth, it is often the case that many widely scattered places are more or less equally likely to emerge as locational foci of the industry. This state of affairs certainly seems to have been a feature of the aircraft industry, which in the 1920s functioned at a variety of locations throughout the United States. Its establishment and eventual rise to dominance in Southern California seem to have been due, in the first instance, to a combination of several fortuitous circumstances, and then, in the second instance, to the systematic development of extensive agglomeration economies as the industry moved into its formative stages and began to attain critical mass. Among the circumstances that helped to initiate aircraft production in Southern California were the early flowering of a culture of amateur aviation in the region, and the presence of a number of early aircraft industry pioneers such as Martin, the Loughead Brothers, Douglas, Ryan, and Northrop. There was, in addition, a tightly knit power elite which over the first few decades of the twentieth century was intent on fostering local economic growth and which commanded the financial means to have a significant practical impact. Thus, in 1920, a group of Los Angeles businessmen led by Harry Chandler, the publisher of the Los Angeles Times , raised $15,000 to help start Donald Douglas in the business of aircraft manufacture. The local military establishment also contributed to the growth of the infant industry by its demands for a variety of experimental planes. Finally, until the mid-1930s, the open shop rules that prevailed throughout Southern California represented a major advantage that helped the burgeoning aircraft industry in its earliest years of development (Cunningham 1951; Hatfield 1973; Lotchin 1992; Markusen et al. 1991; Markusen and Yudken 1992; Schoneberger 1984).

Some authors have claimed that the abundant sunshine, mild winters (permitting outdoor construction of aircraft), and the all-around excellent flying weather of Southern California were also decisive factors in the local development of the industry (e.g., Hammond 1941). This claim seems rather unconvincing, however, given the much greater early success of the industry in the northeast of the country where these alleged advantages were conspicuously absent. Indeed, in the 1920s and much of the 1930s, Southern California was actually a

minor center of the industry, with only some 10 percent of the country's aircraft manufacturing capacity. The data presented in table 4.1 indicate that over the 1920s and down to the early 1930s the industry was largely concentrated in the Manufacturing Belt (in New York and Ohio above all), with the western part of the United States lagging well behind. Then, over the 1930s, California (i.e., Southern California for the major part) steadily outstripped all other states in terms of both aircraft production establishments and especially employment. By 1937, California had 26.1 percent of the nation's establishments and 48 percent of total wage earners in the aircraft industry.

Among the earliest aircraft firms to settle in the region were the Douglas Aircraft Company and the Lockheed Aircraft Company. Both were founded in the 1920s, the former in Santa Monica, the latter in Burbank, with Douglas also setting up a branch plant at El Segundo in 1932. Another important early firm, Ryan Aeronautical, was established in San Diego in 1931. This was followed by a spate of successful new firms over the 1930s. Thus, in 1935, the Consolidated Aircraft Corporation (later Consolidated-Vultee and then General Dynamics Convair) made its appearance in San Diego. In the same year, North American Aviation (later Rockwell North American) moved to Ingle-

Figure 4.1
Major airframe assembly plants in Southern California in the 1930s. The
urbanized areas at the time are shaded.

wood from the northeast of the country. Vultee Aircraft Inc. (which merged with Consolidated in 1943) was set up in Downey in 1936. In 1938–39, John Northrop, who had earlier worked for both Douglas and Lockheed, founded Northrop Aircraft Inc. in Hawthorne. And in 1941 Douglas established yet another branch plant—at Long Beach—that eventually became the firm's main production unit. All of these aircraft manufacturing establishments were located in what were then the fringes of the built-up area of the region, where land was relatively cheap and where adjacent airstrips were available (see fig. 4.1). All were engaged predominantly in final airframe assembly, with engines imported from the northeast of the country where engine manufacture was (as it is today) locationally concentrated. By the late 1930s, after considerable and often bitter confrontations between management and labor, most of the big assembly plants in the region (with the major exception of Northrop) had been effectively unionized (Allen and Schneider 1956).

Notwithstanding the evident growth of the industry in Southern California over the late 1930s, the region might well have remained a minor outlier relative to the U.S. aircraft industry as a whole, had not a number of critical technological breakthroughs occurred. Two such breakthroughs merit special mention. One was Lockheed's creation of the L-10 Electra aircraft in 1933, and the other—of surpassing significance—was the development by Douglas of the DC-3 aircraft in 1935 (Miller and Sawers 1968; Phillips 1971). These two aircraft offered superior standards of speed and efficiency, and they rapidly became the preferred craft in the rapidly growing airline industry. In 1933, according to Phillips (1971), Lockheed products accounted for only some 10.6 percent of all new aircraft added to U.S. domestic fleets, and Douglas products accounted for just 1.2 percent. These percentages had risen to 32.8 percent and 59 percent, respectively, by 1935 thanks to the L-10 and the DC-3; and by 1937 the equivalent values were 11.1 percent and 87 percent, i.e., virtually the totality of all new orders.

Whatever the peculiar and complicated conditions that attended the original foundation of Southern California's main aircraft assembly plants, the turning point of the region's fortunes and its emergence as the dominant center of the industry (and eventually of the entire aerospace-electronics industry) dates especially from this period of technological advance and growth in the late 1930s. Even so, we can still not project forward from these events (i.e., the initial founding acts and the first major round of technology-driven expansion) to the subsequent developmental pattern of the complex. This subsequent pattern is one of great intricacy involving as it does the shifting military needs and policies of the U.S. government, rapid technological change, and the active diversification of the complex. But one important factor dating from these early years certainly helped to maintain the region's leading status. As the aircraft industry expanded, so there came into being in the surrounding area a network of dependent subcontract shops and parts suppliers, and a widening pool of specialized and habituated labor. One directory of manufacturing firms in the Los Angeles area in 1939 lists six major aircraft assembly plants together with thirty aircraft accessories and parts suppliers and three aeronautical instruments manufacturers (Los Angeles County Chamber of Commerce 1939). Many other types of industrial establishments listed in the same directory under such headings as machine shops or metal working shops must also have been linked both directly and indirectly

to the growing aircraft industry in the region. The external economies that were almost certainly generated in this way no doubt helped to enhance the region's comparative advantages in aircraft production, thereby raising productivity levels and contributing to the emergence of a functionally interrelated system of agglomerated production activities.