In SiliWood, Dreams, Data Collide

As defense jobs have diminished, high-tech firms are filling in the gaps in L.A.'s economy

At a designer-rehabbed warehouse here, 200 computer imagineers are reinventing the future of feature films, TV commercials, theme parks, and video games.

Using refrigerator-sized computer banks that whirr in air-conditioned backrooms, artists, animators, and modelmakers create talking pigs (for the movie "Babe"), cola-sipping polar bears for TV ads, and three-dimensional visuals for futuristic thrill rides.

For the city of Los Angeles, this is the economic future.

"It would be impossible for us to thrive in New York, Chicago, or Paris," says John Hughes, president of Rhythm & Hues (R&H), a multimedia firm. Having the film, commercials, park and game industries together is a critical mix. And "that is something you have only in L.A."

The new sector of the economy has been dubbed "SiliWood" - a cross between Silicon Valley's computer wizardry and Hollywood's imagination. As defense and aerospace have diminished as a flywheel to the regional economy - gutted to the tune of 350,000 jobs since 1990 by post-cold-war downsizing - Siliwood is moving in to fill in the gaps.

"It's one of the largest national, big-city turnarounds in decades," says Joel Kotkin, of the Center for the New West in Denver. "What's remarkable is that for the first time, L.A. is not coming back to what it was before.... It is coming back to something different."

According to a recent Los Angeles Times study, movie production and amusements now account for almost three times as many jobs as aerospace in Los Angeles and Orange Counties. Film and entertainment added 18,800 jobs in 1995 or 1-1/2 for every aerospace job lost in the same period. The trend is likely to continue.

"The demand for our services is soaring," adds Mr. Hughes, whose company produces digital effects for about $1 million per minute of finished product. "We expect to be nearly twice our current size in two years."

Besides Los Angeles-based films and commercials, R&H has customers from as close as Las Vegas - where it will create a motion-based simulator ride for the Las Vegas Hilton in 1997 - to as far away as Japan, for which R&H has designed underwater visuals for a theme park.

Tom Lieser, economist for the University of California at Los Angeles business forecasting unit, says the new growth in multimedia and digital-design related jobs is hard to track.

"Multimedia is not really an industry category we have yet been able to track by itself," he says, noting that computer-graphics jobs are growing in the areas of auto design, fashion, and architecture as well. "Anecdotally, however, it's clear there is an explosion."

Another L.A.-based company that is growing quickly is Digital Domain, run by a George Lucas protege, which produced special effects for "Apollo 13." Radio HK, the nation's first full-time Internet radio station is already here, as well as American Cybercast Network, which originated "The Spot," an award-winning, digital soap opera that appears on the Internet's World Wide Web.

"The Internet is opening a whole new medium for writers, directors, producers, and actors," says Russ Collins, an American Cybercast producer. "The reason that L.A. is the place where this genre was born and will flourish is because this is where the talent is."

The explosion has not come without help from government powers that be.

The streamlining of permits for film production has been tackled head-on by Republican Mayor Richard Riordan, who two years ago appointed a local film czar to add to statewide efforts to keep filmmakers in the area. That has helped the city reverse a recent trend of runaway production and keep 60 percent of all feature film starts as well as 70 of 90 prime-time network shows.

And in a coup that made heads roll from Seattle to Phoenix, the city announced in January that DreamWorks SKG - the first Hollywod film studio to be built in 60 years - would set up shop in Marina Del Rey. The city was said to have granted the largest-ever incentive package, at close to $85 million in tax and other breaks.

"The DreamWorks deal was costly, but it ensures that L.A. will remain at the cutting edge of the new digital era whose companies might have migrated elsewhere," says Mr. Kotkin.

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