ALLEN J. SCOTT : Future Was Built Here First : O.C. Became a Juggernaut--and Will Become a Model

He has seen the future, Allen J. Scott says, and it is Orange County.

Scott is a professor of geography at UCLA and an expert on cities and the way their economies cause them to develop. His 1988 book, “Metropolis: From the Division of Labor to Urban Form,” devotes a chapter to Orange County because, Scott says, the county is the prototype for how the nation’s urban areas will grow in the future.

These new urban areas, he believes, will be places that start much as Orange County did--sleepy suburbs with cheap land--but that will become economic powers in their own right when enough factories move in from more crowded, expensive urban areas.

That’s what has happened in Orange County since the 1950s, when defense plants began moving here from Los Angeles. Later a whole local network of new companies grew up to supply the bigger ones with such products as circuit boards and metal and plastic parts. In just 40 years, these companies, big and small, helped transform a once-rural county into the 16th-largest U.S. metropolitan area.

And Southern California is now the most industrialized place in the world, Scott says.

But all this has come with a price tag. Not only are the lovely orange groves and open fields long gone in the northern half of the county, but there have been human costs too, Scott says in a conversation with Times staff writer Michael Flagg. The county’s economic system exploits new immigrants and illegal aliens with low wages and sometimes exposes them to unhealthy and dangerous working conditions, Scott says. And this exploitation has another serious consequence: It leaves the county’s continuing economic health in question.

Of British birth, Scott studied at Oxford and received a doctorate in geography from Chicago’s Northwestern University. After teaching at several universities, he came to UCLA in 1981.

Q. You say in your book: “Orange County is a foretaste of a novel and still only dimly apprehended pattern of industrial development and urban growth.” In what way is it novel?

A. When you think of industrial cities, you think of places like Chicago and Pittsburgh and Detroit--cities with big mass-production industries and big blue-collar work forces. That was the leading edge of the American economy from the 1920s to the 1970s. Orange County’s pathway to industrialization was quite different. It wasn’t based on big assembly industries. It developed on the basis of what are called systems houses, which is a very big and varied unit of production, often a defense contractor that produces very small batches of output--a missile, for instance.

Q. So these companies grew up differently than, say, an auto plant?

A. Around these businesses networks of smaller firms grew up. In Orange County these systems houses have become smaller as they increasingly went outside for things they no longer made themselves. They become more and more engineering and design houses rather than manufacturing, which gets put out to the smaller businesses. It’s a totally novel pattern of industrialization from the classical one in the Northeast and Midwest.

Q. This kind of growth in turn affects much more than just the county’s economy?

A. You get a totally different society. The old system had a small group of managers and a vast class of skilled and semiskilled workers, though they were still relatively well paid. What you get in Orange County is a highly segmented labor market and a society with some very skilled workers--managers, scientists, engineers and so on--and an unskilled, low-wage, increasingly female, immigrant work force--very often illegal, undocumented workers--at the other end. And that affects the social pattern, which means Orange County’s is very different from the social pattern of Chicago.

Q. The county’s economy, as you point out in your book, lives or dies with the defense industry, and now we’re going through another downturn. What’s the outlook for the county?

A. I think there are two strands to this story, the cyclical element and the long run. The cyclical is that we’ve been in a recession, and we’re now starting to come out. That will be reflected in Orange County as unemployment rates start to fall. The UCLA business forecast for Southern California says that by late summer the region will be out of the recession. That’s the good news.

Q. What happens over the long run?

A. Here it becomes speculative: There are two competing scenarios, an optimistic one and a pessimistic one. Probably what will happen is something in between. But you have to put both of them in the context of defense expenditures, which will continue to decline by perhaps as much as a third over the 1990s. And not only are the economies of Orange County and Southern California very dependent on defense spending, they’re also indirectly dependent through the multiplier effect. That’s because the wages of people who work in defense get spent in the service sector and in retail. And the industries themselves consume products from other industries.

Q. There’s a good side to this?

A. The optimistic scenario says there’s enough infrastructure in place, enough productive capacity, enough skill and human resources and enough entrepreneurial talent that this will represent a period of temporary difficulty for Orange County as it reorients its production to civilian uses and new kinds of products. So sometime beyond the turn of the decade, the economy will turn up again.

Q. And the bad news?

A. The pessimistic scenario is that the defense industries will decline more seriously than anybody expected, and we’ll find out the multiplier effects are much greater than we gave them credit for. But also there will be a rise in foreign competition in exactly the kinds of products that the county has hitherto excelled in and sold to a market over which it had a kind of monopoly: that is, the federal government. The theory goes that rising foreign competition will cut deeply into the new civilian markets for products like military and space communications, aerospace, assemblies of space equipment and satellites and so on. We know Japan and Europe have targeted advanced electronics and aerospace as strategic economic sectors for the 1990s.

Q. How does the diffuse work force you mentioned fit into all this?

A. Since the 1960s the county has had fantastic growth in sweatshops serving high-technology industries in such areas as printed circuit boards, electronic assembly, plastic molding, foundry work and metallurgical work. These are unskilled, low-wage jobs. What hasn’t been noticed about this is that there’s been a sort of debauchery of the labor markets, if you like--a failure to pay attention to needs and skills at the lower end of the labor market.

Q. So we’re going backward, in a sense, to a time when there were no unions?

A. Yes. This new model of regional development has many benefits to it, but many minuses as well. In the lower tiers of unskilled labor, we are going backward; wages are falling and in real terms have been doing so in Orange County for this category of workers since the early 1970s. It’s an extraordinary phenomenon.

Q. Why is this happening?

A. I’d ascribe it to the very competitive and unregulated--that is, non-union--labor markets. We even see child labor raising its ugly head again in Southern California. And there are all kinds of problems with occupational health and safety; some of these industries use very toxic materials like solvents, especially in printed circuits. There is an advantage to employers to employ the most politically marginal labor force available, such as illegal immigrants.

Q. Isn’t what’s happening here, ironically, the antithesis of some treasured U.S. myths--for instance, that the immigrant moves up to a skilled blue-collar job, and his children go to school and eventually become middle-class managers?

A. It did work, but only partially. One of the big success stories is, of course, the Asian community. On the other hand, the Hispanics have been less successful. The studies I’ve seen ascribe this to their very different backgrounds: At least the first wave of recent Asian immigrants came from quite educated, urban backgrounds and were already well equipped to cope with an urban society, whereas Hispanics tended to come from rural backgrounds and have less education.

Q. How does all this affect the economy?

A. At this bottom tier the loss of skills and human capital is very dramatic. Now that’s not a basis on which you can move forward very well against an economy like West Germany’s or Japan’s, where the process of skill upgrading at every level has been very insistently dealt with by government policy. We have no effective industrial policy--no partnerships between the public and private sectors--in Southern California or Orange County to deal with these problems.

Q. But isn’t an industrial policy really a broad federal question rather than a regional or local one?

A. It’s all of them. I belong to a group of researchers and professors in California called the New California Economy Group. We don’t believe every item of this pessimistic scenario, but there’s enough in it to make you pause and think about what needs to be done. Our conclusion is that unless there is an industrial policy for Southern California, part of this pessimistic scenario will happen, and we’ll pay the price.

Q. Because our economy is based on this shaky leg of sweatshop manufacturing?

A. Yes, and because strategically we’ve been focused on defense products. Because the places we’re competing with, like Japan and Germany, are places whose economies depend a lot on the fact they have very successful industrial policies.

Q. So what’s the answer?

A. We need a public-private partnership that provides for technology transfers, particularly to small firms, which we now do very badly in this country. Labor markets, upgrading skills, all that. And more effective regional planning. You can’t have places like Orange County--whose development decisions impact all other parts of Southern California--going its own way. The systems of jobs and transportation transcend political boundaries. County government, it seems to me, is passe. Technically, it’s no longer equal to the tasks of effective regional coordination.

Q. Bright--and sometimes influential--people have argued for an industrial policy since the early 1980s, yet it’s still only talk. Do you think we’re likely to have one in the future?

A. Given the parlous state of the American economy with respect to the rest of the world, the United States is going to discover an industrial policy for itself sooner or later. Look what the market did to the shipbuilding industry, the car industry, the domestic appliance industry. Now what is it going to do to electronics and aerospace? How many times does one have to run the experiment before you realize something has to be done?

Q. How is a regional policy likely to help Southern California?

A. Well, I’m the acting director of the Lewis Center for Regional Policy Studies at UCLA, and we’ve just finished a very big research project on two facets of electric vehicles: One is how to get people in Southern California to use them and the other is how to create the capacity to manufacture these vehicles here.

Q. Why electric vehicles?

A. This is going to be one of the biggest markets for non-polluting vehicles. Why not make it one of the centers of production? We did a study, and it’s a technology that’s pretty well here, although it’s not yet commercially viable. With the right kinds of policies, it could be viable. Our argument is that if we don’t do anything about it, the electric vehicle won’t be manufactured in Southern California. It’ll be either Detroit or more likely Japan. Orange County would be a likely place for such an industry to locate.

Q. Realistically, though, aren’t you really saying that the county’s economy has started to rely more heavily on services and that its industrial base, at least, has matured and probably won’t grow as fast as it once did?

A. I expect services will be an important part of the economy. I certainly would expect that many of the less skilled, less high-wage industries will move, and indeed many of them already have since the 1970s. On the other hand, two new types of manufacturing are growing very rapidly in the county: biotechnology, which is small but very dynamic; and probably more promising yet is the medical instruments industry. It’s just mushroomed in the last 10 to 15 years. In fact, the county is probably the major area in the United States for the production of medical instruments.

Q. So where will the next big boom in high-tech industries occur?

A. You have this very peculiar phenomenon in Southern California where you get a whole series of high-technology industrial districts. Orange County is typical and probably the most important now, but there are others in San Diego, Palmdale, Burbank-Glendale, in Ventura County, in Santa Barbara County. The one that’s coming up most rapidly is Chatsworth-Canoga Park. It’s the new Orange County. It’s been growing over the last 12 years probably more rapidly than Orange County, repeating (Orange County’s) experience.

Q. Why do you say Orange County is the most important of these high-tech areas?

A. It’s the biggest in terms of overall employment, and most diversified in terms of its economic structure and its population. And it’s most interesting because of its whole social context. It’s a whole new kind of organization.

Q. Why Chatsworth-Canoga Park?

A. The process is: You get one factory. And then another. These areas become highly centralized units of economic activity because everybody’s doing business with everybody else. You get high land prices around them until at a certain point new industries start to locate somewhere else. What’s happened in Southern California is that the first major industry was the aircraft industry in Los Angeles, right down to the 1950s. Then it broke off into the San Fernando Valley and into Orange County, leapfrogging to cheaper land on the periphery of the city. So Chatsworth is the new periphery. And then beyond that you can see others that will come along maybe 20 years from now.

Q. So are you buying land in anticipation of all this growth?

A. If I had a million dollars, (laughing) I’d put it in land in Ventura County somewhere, actually.

Q. How much does all this resemble what’s going on in the rest of the Sunbelt?

A. There’s the same sort of thing. It’s just that Orange County is a prototype of Sunbelt development, the earliest one. It just so happens that Southern California is much more advanced than anywhere else. When social scientists used to write about the industrial metropolis, they wrote about places like Detroit. Now they write about Southern California.

Q. Speaking of that, did you get a lot of response from the book?

A. On an academic level, it created a debate among professional scholars over my theory, the question being to what degree are we going to allow it to overturn our previous conceptions about cities? In Orange County, yeah, there was quite a response. People like manufacturers, developers, big landowners were interested in the book because it provides them with a way of thinking about how Orange County may develop in the future. I think it raised people’s consciousness about the fact the county’s no longer a suburban backwater; it’s a bustling metropolis in its own right.