2001 Public/Private Partnership Awards

MAYOR BEVERLY O'NEILL, CITY OF LONG BEACH

OUTSTANDING ACHIEVEMENT AWARD

EARTH TECH
LONG BEACH MANUFACTURING EMPOWERMENT ZONE PROGRAM PARTNERSHIP

In anticipation of the Long Beach Naval Shipyard closure in 1997, the City of Long Beach, as Local Redevelopment Authority, developed a Base Reuse Plan to mitigate this severe economic blow.  In 1994, the Long Beach Naval Station was closed, along with the Naval Hospital and a Naval Family Housing Area.  City job losses included 16,500 Navy personnel, 7,600 civilians, and 3,500 sub-contract workers.  Additional job losses due to downsizing at McDonnell Douglas numbered over 50,000. The City was faced with dire economic circumstances.  The total annual impact was estimated at $1.75 billion in economic losses.

Facing up to the challenges, the City planned and implemented a vigorous, intense effort to transform the Long Beach economic base.  A major part of that effort involved acquiring the personal property and assets of the Naval Shipyard to establish a national prototype Manufacturing Empowerment Zone (MEZ) Program.  This joint program, involving the U.S. Department of Commerce, Bureau of Export Administration, and the Navy, would redistribute shipyard machinery and equipment to local and regional small to medium-sized businesses at fair prices to increase production capacity, employment, and economic potential.  With 60% of regional businesses classified as “small business,” the MEZ program could have a major impact on the local and regional economy.

This innovative program was a one-of-a-kind model conceived by the Department of Commerce.  With the success of this program in Long Beach, it is sure to be replicated in other areas of the nation.  The program is sustainable in that it takes advantage of the Federal investment in the Shipyard equipment, ensuring that it is used productively in the workforce to create additional job opportunities and spur economic development.

The City of Long Beach competitively selected Earth Tech to administer the MEZ Program.  Earth Tech had relevant experience redistributing assets from former Army Depots.  The City received an Economic Development Conveyance of the equipment in November 1998.

The Earth Tech / City of Long Beach partnership in the administration of the MEZ program is a model example of public/private teamwork.  The Program exhibited tremendous cost savings to all parties involved.  The participating businesses were able to purchase equipment at a price lower than they would pay on the open market. The Federal government saved $34 million dollars that it would have incurred to dispose of the equipment through alternative methods.  The City of Long Beach saved the cost of administering the program, as it was a self-funding community service with Earth Tech being compensated from the proceeds of the equipment sales.  Nearly $1.85 million of cost to inventory the 600,000 assets before they could be sold was borne by Earth Tech.  Additionally, the City was able to fund programs and services to benefit the homeless out of the proceeds.

The MEZ program’s impact on the city economy is enormous.  The measurable results indicate that 973 businesses registered for the machinery/equipment sales program and 34% of those businesses actually purchased equipment.  To date, over 325 businesses have received machinery and equipment with a market value of over $13 million.  Participating business owners estimate that the collective assets will create over 5,500 new jobs and increase economic capacity by a whopping $416 million (annual business revenue).

The Long Beach Naval Shipyard has now been closed for over three years.  This action could have dealt a fatal economic blow to a city that was still suffering from other losses.  Instead, with the help of the MEZ program, implemented by Earth Tech and the City of Long Beach, residents are experiencing improved quality of life and economic vitality.

The City was able to redistribute the assets of the shipyard in a productive manner that met Navy base reuse requirements, created jobs and did not involve the use of City or taxpayer funds.  This was especially important to a city that had already been feeling the effects of the national economic downturn of the early 1990s, followed by the disestablishment of a 75-year relationship with the Navy.  Local businesses were able to acquire the equipment at a reasonable cost, enabling them to expand their businesses and create new jobs.  Additionally, the City was able to donate furniture, fixtures, and other non-production equipment to over 40 non-profit and civic organizations through a comprehensive Community Outreach Program.

Perhaps the impact of this program can best be summarized by the participants.  One businessman wrote, “Thank you for assisting our company not only in creating new jobs, but also in helping us to be efficient and remain competitive in the new economic world.”  And another stated, “This was truly a once in a lifetime opportunity.”