Employment Trends and Cluster Opportunities

Presented to the Steering Committee for the Los Angeles and Orange County Regional Consortium

November 14, 2006

Research Objectives

Primary Objectives:Evaluate the economic environment in the

LAOC region as it relates to supply and demand for workers

Identify key clusters in the regions and examine growth, wages, and regional concentration

Determine which clusters and areas of research should be considered in the future

Regional Economic Outlook

Employment: Steady employment growth forecast, with stronger growth in

the service sectors

Unemployment (August 2006): US - 4.7% California - 4.9% Los Angeles County - 5.1% Orange County - 3.6%

Issues in the regional economy: Depreciation of the dollar Regional infrastructure for trade (short and long-term) Agreement to cut greenhouse gasses Rising interest rates and inflation Housing affordability

Industry Clusters

Definition:“A concentration of companies and industries in a geographic region, which are interconnected by the markets they serve and the products they produce, as well as the network of suppliers and key economic foundations such as research universities, capital, physical infrastructure and labor market.”

Source: California Regional Economies Project

Why are Clusters Important: Drivers of the regional economy Require focused workforce development strategies Opportunities for strategic planning and employer

collaboration with the community colleges

Industry Clusters I

1. Apparel Design and Manufacturing: includes businesses that design and manufacture textiles, apparel and footwear;

2. Construction: includes firms that provide residential, commercial, and heavy-duty infrastructure construction services;

3. International Trade and Logistics: includes firms that are engaged in or support the transportation and warehousing of products;

4. Motion Picture and TV Production: includes businesses that produce and support the production of movies, radio, television, and music;

5. Tourism and Entertainment: includes firms that provide a broad array of visitor and leisure services, including eating and drinking establishments, hotels, amusement parks, and transportation services for visitors.

Industry Clusters II

1. Business and Professional Management Services: includes a wide range of business support services, from printing and employment services, to accounting, architecture, and legal services;

2. Education: includes public and private education facilities (kindergarten through high school), colleges and universities, trade schools, and educational support services;

3. Finance, Insurance, and Real Estate (FIRE): includes firms that provide financial, insurance, and real estate services;

4. Healthcare and Medical Services: includes businesses that provide medical services, from comprehensive acute care hospitals, to medical offices, and long-term care facilities and services;

5. Public Sector (Government): includes local, state, and federal government employers, including public safety services, national security operations, and community development programs.

Industry Clusters III

1. Communications: includes businesses that provide telecommunications services and manufacture communications equipment, including audio and video equipment;

2. Computer and Electronics Manufacturing: includes firms that manufacture and support the manufacture of computers, semiconductors, and other electronic equipment;

3. Defense and Transportation Manufacturing: includes firms that manufacture transportation vehicles, including planes and ships, as well as defense contractors;

4. Energy and the Environment: includes firms that manufacture or research energy production, as well as products and services used to mitigate the environmental impact of these activities;

5. Life Sciences and Biotechnology: includes firms that are engaged in or support research, development, and production in the life sciences;

6. Software and Computer Services: includes firms that develop software and provide computer services, including Internet service providers.

Measures of Employment & Concentration in LAOC

High Employment/ High Concentration Industry Clusters

Emp. Conc.

Business & Professional Mgt. Svcs. 11.1% 1.18

Tourism, Travel, & Entertainment 11.1% 1.10

Finance, Insurance, & Real Estate 6.7% 1.21

Life Sciences & Biotechnology 4.2% 1.11

See pages 12 – 16 in the memo for a more comprehensive display of proportional employment and concentrations in the LAOC region

Measures of Employment & Concentration in LA

Low Employment/ High Concentration Industry Clusters

Emp. Conc.

Apparel Design & Mfg. 2.1% 2.48

Defense & Transportation Mfg. 1.8% 1.58

Communications 1.0% 1.04

Energy & the Environment 0.5% 1.28

See pages 12 – 16 in the memo for a more comprehensive display of proportional employment and concentrations in the Los Angeles County

Measures of Employment & Concentration in OC

High Employment/ Low Concentration Industry Clusters

Emp. Conc.

Healthcare & Medical Services 7.1% 0.87

Public Sector (Government) 3.6% 0.45

See pages 12 – 16 in the memo for a more comprehensive display of proportional employment and concentrations in Orange County

Expected Employment Growthin LAOC, 2005 - 2012

Apparel

Logistics

MP & TV

Tourism & Travel

Construct.Non-Clustered

80

90

100

110

120

2005 2006 2007 2008 2009 2010 2011 2012

Year

Ind

ex

Index: 2005 = 100

Industry Clusters I

Expected Employment Growthin LAOC, 2005 - 2012Industry Clusters II

Business Services

FIRE

Healthcare

Public Sector

Education

Non-Clustered

100

105

110

115

2005 2006 2007 2008 2009 2010 2011 2012

Year

Ind

ex

Index: 2005 = 100

Expected Employment Growthin LAOC, 2005 - 2012Industry Clusters III

Life Sciences

Energy & Env.

Software & Computer Services

C & E Manufacturing

Communications

Defense

Non-Clustered

90

100

110

120

130

140

2005 2006 2007 2008 2009 2010 2011 2012

Year

Ind

ex

Index: 2005 = 100

Expected Employment Growthby County, 2005 - 2012

LA OC LAOC

Software & Computer Services 31.9% (1) 39.2% (1) 34.5% (1)

Tourism, Travel & Entertainment 13.4% (2) 21.1% (2) 15.7% (2)

Life Sciences & Biotechnology 12.5% (3) 14.3% (6) 13.1% (3)

Business & Professional Management Services 8.7% (5) 18.7% (3) 11.9% (4)

Computer & Electronics Manufacturing -4.6% (14) -2.6% (14) -3.2% (14)

Communications -4.3% (13) -5.2% (15) -4.1% (15)

Apparel Design & Manufacturing -17.0% (16) -22.2% (16) -17.8% (16)

Non-Clustered 5.30% 8.50% 6.20%

All Industries 5.40% 8.40% 6.50%

Industry Cluster

Expected Employment Growth 2005 – 2012 (Rank)

See page 16 in the memo for the complete table

Median Wage by Industry Cluster (LAOC, 2004)

Emerging Clusters

Video Gaming and Entertainment Technology• Strong presence in the region – 50% of California

companies in LAOC• Strong employment growth expected• Opportunities for local community colleges to support future

growth in the industry

Computer & Information Security• Strong short-term employment growth expected• Opportunities for Database Security Engineers & Data

Security Analysts

Homeland Security & Nanotechnology• Findings indicate potential for employment growth and

opportunities for community colleges to help support the growth of these clusters through local workforce development

Clusters to Focus on in Future Research I

1. Energy & the Environment:• Review and Revise cluster definitions• Reevaluate growth expectations due to the current

legislative and economic environment• Identify sub-sectors and occupations with strong growth

expectations• Determine appropriate strategies and programs for

community colleges

2. Software & Computer Services:• Identify sub-sectors• Identify work that is being outsourced and why employment

concentration is low for the region• Identify work that is growing within the region• Determine growth occupations• Determine skill-sets of importance

Clusters to Focus on in Future Research II

3. Business & Professional Management Services:• Identify sub-sectors and occupations with strong growth

expectations• Work with employers to determine appropriate strategies

and programs for community colleges

4. Public Sector:• Evaluate workforce needs taking into account the high level

of expected retirements in this cluster• Identify sub-sectors and occupations most affected by

forthcoming retirements• Determine the composition of the local workforce• Identity key skills-sets• Work with employers to determine appropriate strategies

and programs for community colleges

Clusters to Focus on in Future Research III

5. Life Sciences & Biotechnology:• Define the industry cluster • Assess demand for manufacturing and technical workers in

the region• Identify work that may be outsourced and work that is

growing within the region• Determine key skill-sets/ areas of specialization• Work with employers to determine key training

requirements

6. Travel, Tourism, and Entertainment:• Identify higher-paying sub-sectors and occupations• Determine the types of programs which could be developed

by local community colleges• Identify strategies to effectively collaborate with employers• Identify and implement career-ladder programs in the

industry

Clusters to Focus on in Future Research IV

7. Motion Picture and TV Production (LA Only):• Identify sub-sectors and occupations with strong growth

expectations• Identify work that is being outsourced and work that is

growing within the region• Determine key skill-sets/ areas of specialization• Identify and implement career-ladder programs in the

industry• Work with employers to determine appropriate strategies

and programs for community colleges

Employment Trends and Cluster Opportunities

Presented to the Steering Committee for the Los Angeles and Orange County Regional Consortium

November 14, 2006