Why Long Beach Isn't Detroit

How Southern California survived the collapse of aircraft manufacturing without a bailout

It comes up in every argument about Washington bailing out Detroit: Don’t you heartless market fundamentalists realize what would happen to the Rust Belt if we subjected the Big Three to “uncontrolled bankruptcy”? “Had General Motors and Chrysler been allowed to go into bankruptcy last fall,” the lefty economist Dean Baker wrote in a debate with me at the Los Angeles Times website in April, “it would have quickly led to a chain of bankruptcies by a whole set of parts suppliers.…This would have meant almost a complete shutdown of the auto industry in the states of Michigan, Indiana and Ohio.”

Aside from the popular yet false notion that “bankruptcy” is synonymous with “liquidation” (tell that to the former employees of bankrupt WorldCom who now work for WorldCom’s new owner Verizon, or indeed to the employees of the currently bankrupt Los Angeles Times), this line of discourse is interesting for the implied real-world critique. As in, you wouldn’t possibly think that way if you realized what effects these abstract ideas would have on living, breathing communities.

As it happens, I know all too intimately how industrial collapse can affect a neighborhood and city, and that experience helped convince, not dissuade, me that few kisses are more deadly than a government giving artificial respiration to private business.

I grew up less than one mile from what was once the biggest aircraft manufacturer in the United States: McDonnell Douglas, in Long Beach, California. At its height during World War II, Douglas was cranking out one airplane in those huge hangars down the street every two hours, using a work force that peaked at more than 150,000. As recently as the late 1980s, employment was in the 80,000s, allowing many a high school grad to earn an upper-middle-class wage with generous benefits for twisting lug nuts on an assembly line. It was a dream set-up, and like most dreams it came to an abrupt end.

The collapse of the Cold War, and the defense-related contracting that came with it, hammered Southern California, particularly the Long Beach/South Bay aerospace belt. An estimated 200,000 good jobs went poof, not counting the 25,000 or so associated with the shuttered Long Beach Naval Shipyard, laying waste to what had been a seemingly limitless real estate boom. I recall visiting home in 1991 and seeing “For Sale” signs on every third or fourth house on the block. Even before the more notorious riots-fire-earthquake-O.J. quadrophenia that rocked Southern California in the early 1990s, the region was bleeding asset value, population, and hope.

The popular debates at the time are worth remembering. On the populist right, there was a lot of dystopian chatter about how we had irreversibly traded our taxpaying (and patriotic!) industrial base for a tax-gobbling (and possibly treasonous!) wave of Mexican immigrants. On the populist left, it was all about the unstoppable, inscrutable Japanese (who were, as our cover story “Turning Japanese” on page 20 details, on the precipice of their own decade-long funk). Feminist thinker Susan Faludi used the emasculation of McDonnell Douglas as a set piece in Stiffed: The Betrayal of the American Man. In The New Yorker, Joan Didion portrayed the legacy culture left behind after aerospace’s highwater mark as a suburban carnival of unknowing grotesques. The one thing that everyone seemed to agree on was that Long Beach would never regain its lost glory.

Everyone turned out to be wrong. As the market for war making collapsed, the market for peaceful global trade exploded, turning the twin ports of Long Beach and Los Angeles into the largest commercial port complex in the Western Hemisphere. Commercial airplane manufacturing and shipbuilding gave way to warehousing and tourism. A housing market that had looked so hopeless to homeowners was reheating by the second half of the decade. And in arguably the most telling statistic about a city’s health, the population of Long Beach actually grew by 7.5 percent in the 1990s.

Government policy, and lack thereof, played an important role in the speedy recovery and economic transformation of my hometown. Though the Naval Shipyard closure was widely seen as a grievous blow, federal rules forbade the expenditure of municipal funds to keep the base on life support, and so the city set about selling off (and even donating) all the property to private interests who have made more efficient use of the land and equipment. Meanwhile, McDonnell Douglas (which Boeing bought in 1997) was allowed to suffer for its many missteps in the commercial airline market rather than receive a series of bailouts. Although the defense contracting side of Boeing is still the city’s largest employer, and thus subject to unreliable political appetites for C-17 cargo planes, the municipal economy is now almost unrecognizably diversified.

None of which is to deny the powerful sense of loss in the face of a once-proud culture shriveling into the void. I visited that impossibly vast hangar back in 2006 to pay my respects to the last 717 being prepped in the structure’s lone illuminated corner. A football field or two away, on an elaborate platform in the yawning darkness, hung a bell that the workers used to ring whenever a new order was placed. As my then-colleague and airplane aficionado Paul Thornton, who was with me, noted in the Los Angeles Times, the bell “has been silent since 2004.” When we went across the street to the Flite Room, long the McDonnell Douglas worker’s dive bar of choice, the new owners had only the dimmest of memories of assembly line grunts taking the edge off at the end of the day.

Yet the neighborhood also has changed for the better. Across the street from the Flite Room sits the niftiest Spanish-English bookstore I have ever seen. The nearby strip club and X-rated theater were long ago replaced by a dental clinic and restaurant row. A culture that had been virtually monochromatic during my childhood, with overt tinges of racism, is exponentially more diverse and tolerant. And the economy is more resilient, even with the recent rough times. Boeing has razed one hangar to make way for a residential/retail complex, and future plans for the one I visited ranged from Amazon.com to a Hollywood studio. The fundamental condition of Southern California is constant dynamic change, not industrial nostalgia, and the area has responded accordingly.

Would my old neighborhood be better off if the local plant had 80,000 workers instead of the current 5,500? Yes, if those jobs were sustained by meeting the needs of private customers in a competitive marketplace. But clustering employees to serve government tastes, no matter how lucrative it can be for long stretches, is ultimately as unstable and dangerous as an economic bubble in real estate, stocks, or tulips. When unplanned events change your chief customer’s preferences overnight, just as when a bull market suddenly runs out of buyers, there are too many human beings left stranded, sending ripple effects throughout an economy. The policy question then shifts to cleanup.

Detroit’s auto industry now answers to one main customer: the United States government. The Obama administration is setting contract terms for shareholders and creditors, firing CEOs, delivering stern lectures from the bully pulpit about consolidating brands, and forcing the already unprofitable companies to produce even more unprofitable hybrid cars. With each step away from the customer and toward the government, the Big Three become less competitive and less likely to be sold off to profitable companies that might have some use for the legacy plants, workers, and brands. By “saving” the U.S. auto industry, Obama stands to lose a once-great city.

Matt Welch (matt.welch@reason.com) is editor in chief of reason.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    Cool! Does that mean I'll be getting my print issue soon?

  • Joel||

    By "saving" the U.S. auto industry, Obama stands to lose a once-great city.

    Oh, Matt. You had me til the very last line. Blame Obama for anything you want and I'm right there with you, but you should maybe leave Detroit out of it. Detroit was on its way out of "great city" status before he was born. It became official when he was about seven. It sure has hell can't have deteriorated all that much further in the past few months.

  • Mike in PA||

    Here's hoping the Red Wings go the same way as the rest of the town.

    By all rights - and this article - Anaheim should have prevailed.

  • Jeff P||

    I blame Bob Seger. The release of "Like A Rock" laid waste to many cities...

  • ||


    Mike in PA | June 1, 2009, 12:52pm | #

    Here's hoping the Red Wings go the same way as the rest of the town.


    Yo, Fuck Pittsburgh.

  • ||

    Here's hoping the Red Wings go the same way as the rest of the town.

    This. Always this.

  • Mike in PA||

    Oh come on, Sage...

    I could be discussing Star Trek.

  • JB||

    For one, it doesn't have the Detroit City Council and Mayor. Those clowns are the biggest obstacles to progress in that city.

  • Colin||

    Tourism has played an enormous role in Long Beach's revival. They have a beautiful 5-mile coastline and 350 days of sun -- not something Detroit can very likely match.

  • DJF||

    """""Commercial airplane manufacturing and shipbuilding gave way to warehousing and tourism."""'

    Only at Reason would you find someone sneering at the jobs of producing the most sophisticated machines in the world as mere "twisting lug nuts". While at the same time praising the future of working in a warehouse or making beds for tourists.

    Hopefully Matt Welch will be able to give up that dead end job of typing at Reason and get a good job working at a warehouse soon. Or do you have your eye on getting a job as a maid? Remember to put out clean towels.

    And if you want to talk about jobs being supported by a competitive market that would leave out those warehouse and maid jobs since with the collapse of international trade and tourism bubble caused by the collapse of the bankers bubble the competition for those choice jobs will be rough.

  • No Name Guy||

    As one who works for the company that was bought by the former McDonald Douglas (yes, Boeing people thing we were bought, not the other way around)....

    Douglas, while fine in its day, toward the end was just rolling out (generally) uncompetitive products that deserved to die. The management failed to invest in products that the market wanted. They failed to have a complete product line. They failed to anticipate the market. In short, commercial aircraft manufacturing in Long Beach was doomed - period.

    As far as military manufacturing - the article makes a great point. Do you really want your career riding on the political whims of congress? In the end, that's what it is - congress decides who gets what on large procurement contracts. See the fight over JSF some years ago and the on going fight on the tanker replacement today. Besides - congress ALWAYS cuts back on the numbers, either due to changing priorities or cost constraints / growth. Working in defense aerospace - I've said it a million times: The customer (in reality, the congress) is schizophrenic.

  • ||

    Drink!

    And Mike in PA - I was agreeing with you. Apparently that's what "This" means. I was trying to be a few years younger than I am.

  • Matt Welch||

    Hopefully Matt Welch will be able to give up that dead end job of typing at Reason and get a good job working at a warehouse soon.

    I have actually *worked* a warehouse job in Long Beach (though, alas, they didn't let me drive the forklift), and while it was better on my delicate hands than twisting lug nuts, the pay, too, was a fraction of the other job.

  • Matt Welch||

    They have a beautiful 5-mile coastline and 350 days of sun -- not something Detroit can very likely match.

    While totally true, this statement may give the impression that the beaches in Long Beach are a big attraction; in fact they are kind of eh.

  • Mike||

    Nice article. I used to live in Signal Hill til I was 5 (from 1985-1990) and my dad used to work across the airport until we moved about 12 years ago. I remember driving by the hangars on the way to pre-school, being fascinated by the huge aircrafts, and just seeing them being brought off the assembly-line by the truckload. Then I remember driving by it a few years later and seeing how empty they were, and yet never really noticed it much because of all the developing that was going on.

  • Mike||

    "While totally true, this statement may give the impression that the beaches in Long Beach are a big attraction; in fact they are kind of eh."

    I remember when I was a little kid, downtown Long Beach seemed like the place to be, or at least it seemed that way in the 80's. Now... not so much.

  • Matt Welch||

    I remember when I was a little kid, downtown Long Beach seemed like the place to be, or at least it seemed that way in the 80's. Now... not so much.

    Downtown has made a huge comeback the past 10 years. Though Acres of Books, alas, has closed.

  • Paul||

    While totally true, this statement may give the impression that the beaches in Long Beach are a big attraction; in fact they are kind of eh.

    Yes, but you have them. Detroit doesn't.

  • ||

    Beaches in Detroit?

    I smell shovel-ready stimulus project!

  • ||

    I don't want to rain on L.B.'s parade, but yeah, the beach in long beach is not exactly what beach oriented vacationers would be looking for. I'm not sure it could ever be a real tourist destination with all the smog from the ships.

    I'm more fascinated by the stray cat colonies on the hillside above the beach, and seeing pumping oil wells in odd places.

  • ||

    Millikan High, '73.
    Matt, thanks for the memories. I'll raise a schooner to ya down at Joe Jost's, the next time I'm in LB to visit my parents.

  • Matt Welch||

    I'll raise a schooner to ya down at Joe Jost's, the next time I'm in LB to visit my parents.

    When Joe Jost's goes, then the terrorists really *will* have won.

  • Steve Smith||

    The one thing you don't mention in your piece is the role having a liberalized bankruptcy system played in the post-aerospace economy in Southern California. The mid-to-late 90's saw an explosion in the number of bankruptcies filed in the Central District of California, a large percentage of which were laid-off employees of some these companies, and who were able to obtain a fresh start after they lost their jobs (and in some cases, kept their homes).

    Also, I'm not sure if the Queen Mary counts as being a "beachside attraction," but it has long been a big tourist draw. In any event, I think we can all agree that the turning point for that community came when the Blue Line opened....

  • Matt Welch||

    Smythe -- You know, there's a natural market out there for someone who can explain the role bankruptcy law plays on public policy.... In this specific case, was there anything particular to California, or was it just that federal law was working well then?

    As for the Blue Line I actually agree with you, with the important caveat that my belief is wholly untethered to any evidence (such as a ridership numbers, which have never amounted to much on that line).

  • EM||

    Long Beach is part of a much larger area that is not as closely tied with aerospace. The big difference between that and Detroit is that Detroit is part of a larger region that is heavily tied in with a declining industry - manufacturing.

  • ||

    Huh, I clicked on the GM advertisement on the side of the article, and was delighted with the rock video/blurb about the U.S. auto industry's "re:Invention."

    "Because the only chapter we're focused on is chapter one." "Fewer, stronger brands."

    One helluva relaxing techno-deephouse-acidjazz soundtrack to the GM Volt proving grounds infomercial thing. Frank Weber is the fucking smooth piano playing design mind.

    I feel better now. Detroit is going to blow doors on Long Beach, yo.

  • ||

    I read that $3.6 million of stimulus money could be used to level the Michigan Central Station. Quite a building.

    Yo-Yo Ma

  • ||

    Interesting article. A couple points from someone that has a unique perspective. I grew up in the backyard of MacDac's Aerospace facility in Huntington Beach and remember the issues the author cited regarding the "expected" demise of SoCal back in the late 80s and early 90s. For the last two years I've lived in Detroit attempting to help right the ship at GM. LA never had the "unionist entitlement" attitude that pervades Southern Michigan and also got over its racism years ago. Detroit on the other hand is more like the post-Watts Riots LA of 1966 and 67 relative to racism. Read the Detroit Free Press for the litany of race related issues that infest Detroit. SoCal folks are "can do" people that work hard to make a buck. Detroit saw this day coming years ago but ignored it. GM was on the rocks over 20 years ago. Now they want us to step in and save their precious over-market jobs and gold plated benefit plans. I'm so thankful to be leaving this place behind!

  • ||

    While in general I agree with the libertarianism espoused by Reason ( I did have a subscription for 3 years , after all) there are two points that the editors and writers of the magazine tend to have their heads stuck in the sand about:
    A. Uncontrolled illegal immigration into the quasi-welfare state US

    B. Economics

    Any idea that there might be even the slightest problem with illegal immigration is roundly derided, and the editors and writers are only slightly less likely than usual to pull the "racist" card. Meanwhile, the most simplistic of economic models is trotted out again and again. The fact is , economic models is based on the psychology that humans use when trading. Despite various attempts, no one fully understands human psychology but you'd never know that reading the usual Reason screed about the infinite benefits of global trade.

    Southern California, Matt, is dying. As is your state as a whole (see the various articles in your own Rag about the state budget crises) as middle class tax payers flee for other climates while poor and mostly less-educated people replace them. The ability of California to maintain its basic infrastructure -let alone its technological base -is called into question. Meanwhile MOST of your economy over the past ten years was based on the very silliness you celebrate: A housing bubble (not over yet-just wait till the option ARMS's kick in) based on little to no lending standards and corrupt government regulators -not to mention a supply of willing, cheap, illegal labor. You've also got a tourist industry - hey, I live in Baltimore - we have a tourism industry too!

    In any case , in part because your policy proscriptions for your state are so wrong-headed (being based on a glass is not only HALF full it IS full version of the world) you and Reason will fully deserve the consequences of your ideological blind spots.

  • KaRi from LBweekly.com||

    How funny, I found this article via a follower's/follower's tweet and I KNOW that XXX Theatre you mention.

    My (ex)husband lived in the neighborhood behind the Cloveroom when we first dated.

    In response to your commenters comments, I heard Joe Jost's was originally on Pine Avenue? Also, if you ache for Acres memories, just put "Acres of Books" in youtube search!

  • nfl jerseys||

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  • Scarpe Nike Italia||

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