In San Diego, New Jobs Spring From Defense Ashes

Two years ago, Rick Wilson was a well-paid senior illustrator at General Dynamics' space-systems division.

Then the nationwide decline in defense spending arrived at his drafting table.Within months of selling its aerospace division to Lockheed Martin, General Dynamics laid off Mr. Wilson and 1,200 other workers.

The defense downturn has hit particularly hard here in San Diego. In just six years, almost two-thirds of the area's jobs in defense/aerospace, a mainstay industry, have disappeared.

Yet the story is not entirely bleak. Thanks in part to a high-tech boom ranging from telecommunications to computer software, Wilson and some other former defense workers have not only found new jobs, but are getting paid as much or more than they got before. Moreover, many locally made products - from golf clubs to virtual-reality games - are based on know-how drawn from the defense/aerospace sector.

And overall, the city appears to have become a hotbed of small-business development.

Kelly Cunningham, an economist at the Greater San Diego Chamber of Commerce, says an interesting discrepancy turned up in surveys done after the 1990-to-1993 recession. While local employers reported a net loss of 19,440 jobs during the recession, city residents reported in surveys a net gain of 36,100 jobs.

Why the discrepancy? "It seems that lots of people who had lost their jobs were busy creating their own workplaces," Mr. Cunningham observes. "They were going into business for themselves."

That's what Wilson tried to do - at first.

He hung out a freelance-art shingle, but with little success. Having worked at the same firm for 14 years, "there was a skills gap," Wilson says. "I'd been working with traditional technology: drawing board, pen and ink, an air brush for retouching photos. But I soon discovered that everyone else out there was doing things digitally."

He won a new job only after retraining in an art course that he found through a federally funded career center at Lockheed Martin, another aerospace firm with operations in the region.

Wilson is now an illustrator at the telecommunications firm Qualcomm, making 15 percent more than he did at General Dynamics.

Meanwhile, San Diego is bursting with upstart businesses, many exploiting technologies developed for military use.

Composite materials are fueling a growing sporting-goods industry, for example. Carlsbad, to the north of the city, now is home to 20 companies employing 10,000 workers making golf clubs and other sports gear.

Callaway Golf, the largest of these manufacturers, has grown from five employees in 1983 to 2,000 today, with annual sales of $449 million. The firm's premier product is a golf club with an enlarged head made of titanium, an ultralight material developed for aerospace.

Greystone Technology, meanwhile, was founded in 1989 to transfer flight-simulator expertise to the commercial entertainment industry. Its first product, MegaBall, came out in May.

The virtual-reality game is designed to capture a chunk of a growing market for location-based entertainment, a kind of upscale video arcade.

"The market has yet to jell," says Bernard Crowe, Greystone's commercial-services chief, who used to work at Ball Aerospace. "Meanwhile, until our commercial side takes hold, we're generating $3 million this year from defense contracts."

XXsys, another San Diego firm, has already made its conversion to the private sector.

Founded in 1985 to develop composite materials for military clients, the company did a quick about face in 1993, when that market dried up. Now, its carbon composites are used in bridges instead of in aircraft or satellites.

The company's new market stems from widespread safety concerns, heightened in the wake of the 1994 earthquake in Northridge, Calif., in which seven bridges collapsed. Analysts estimate that six of them could have withstood the quake with reinforcement, and that 5,000 other bridges in the state need buttressing. Nationwide, the figure may be 230,000.

XXsys has developed a method of retrofitting freeway bridge columns in a flexible sheath of resin-impregnated carbon filament. Since entering the market in 1993, the company's annual sales have climbed, but are still modest - about $700,000.

Gloria Ma, chief executive of XXsys, sees advanced materials as a fount of economic progress. Citing the Stone Age, Bronze Age, and the iron- and steel-based Industrial Revolution, she says, "Quality of life is always tied to the materials we have to make our tools."

Despite all the buoyancy of new businesses in the region, thousands of former defense workers still face the challenge of updating their skills to match the needs of other industries.

Part of the lesson is learning to work in a new culture. The private sector "is not like meeting the conditions of a government contract," says Greystone's Mr. Crowe. "You have to say, 'I believe there's a market, and I'm going to make a commitment to it, even though I know I'm not going to recoup my investment until I have sales.' Out here, it's a completely different mind-set."