California dreaming

IF CALIFORNIA was looking for a new state mascot, it could do worse than go to the movies. A hot tip for this year's Oscars is Babe, starring a piglet who aspires to be a sheep dog, and featuring an entire farmyard of talking animals.

Having lost his family to the butcher, Babe the pig leaves an outdated industry - pork - for a career in sheep management. The message of the film is you can always be what you want to be - an apt metaphor for California's economic renaissance.

Earthquakes, riots, recession, everything but plagues of frogs, was the stuff of jokes against California in the early 1990s. It saw the bottom fall out of real estate and a huge shrinking of the aerospace and defence industries.

But after five depressing years, California has declared itself reborn. The tide of Californian emigrants breaking away north to rain-drenched Seattle and east into cool Colorado is drying up. The car phone has taken the frenzy out of long commuter journeys. Air quality is reported to be improving - even a sense of humour is returning.

California "IS BACK", according to the new vanity number plate on Governor Pete Wilson's official limousine. When elected five years ago he wondered whether he would serve as "chief executive of California or referee of its bankruptcy".

California is home to 33 million people and the seventh larg-est economy in the world. The Los Angeles area has overtaken New York as the biggest US port, boosted by trade with countries of the Pacific Rim. Economists point to a revival powered by hi-tech and led by exports. "It's not a jobs boom, but it's a boom in virtually every other way," says Stephen Levy of the Centre for the Continuing Study of the California Economy in Palo Alto.

Jobs may not be booming, but they are certainly growing. By the spring California will be close to replacing half a million jobs lost in the defence and aerospace sectors, analysts believe. In southern California employment in the film industry has increased by a third in 18 months. In Silicon Valley to the north, personal computer and semi-conductor shipments are climbing at rates of 30 per cent a year, caused by penetration into the Japanese market for computer chips.

African American restaurants report, however, that white customers are still too scared to return to south central Los Angeles after the 1992 race riots. And the historic avenues of Hollywood itself are still lined with sleazy motels, the area a hang- out for gangs and prostitutes.

But these days there are distinct signs of life in "beautiful downtown Burbank", the town on the northern edge of LA where supposedly nothing ever happened. It is the place where both Disney and Warner Brothers have chosen to expand. The revivals in Burbank and along the booming coastal corridor from Los Angeles International Airport to Santa Monica - whose malls are a yuppie mecca - are being driven by entertainment technology. In a move heavy with symbolism, Stephen Spielberg's hi-tech studio DreamWorks is occupying military hangars built by Hughes Aircraft.

They once housed the Spruce Goose, a balsa-wood seaplane and one of the US aerospace industry's more bizarre failed experiments. DreamWorks plans to invest $200m over three years in the first new studio in California in 50 years, planned as an 100-acre entertainment "campus".

It would be the heart of a new township with five million square feet of office space built onseafront wetlands. "It's the biggest business win that any city has ever had," said Mayor Richard Riordan, whose administration struggled to lure DreamWorks to the site with tax breaks and promises of quick construction approval. "It sends a message to the rest of the world that Los Angeles is back."

Dreamworks is a magnet for hi-tech effects companies such as Rhythm and Hues. Started in a partner's living room, the workforce has risen in the past three years from 70 to 200 people. The firm supplied computer animation for Babe, Waterworld and Batman Forever and in Britain its work can be seen in advertisements for Gilbey's Gin.

Excerpts from all three films were shown at the Academy Theatre as candidates for a new visual effects category of Oscar.The audience, exclaiming over Babe's splicing of real and robot sheep, was very much a cross-section of this new-look Hollywood. Computer programmers and technicians discussed motion control and computer graphics, and the challenge of having elephants and rhinos stampeding through a suburban home in comedian Robin Williams' new film Jumanji.

In some cases hi-tech entertainment is replacing lost defence jobs by drawing on military technology. At the virtual reality firm, Illusion Inc, a third of the 20 employees are ex-military. The company supplies battlefield simulators and weapons software to the Pentagon but is also designing a virtual reality racing circuit for Future World in Indianapolis. "Companies seem to have adjusted to new realities and are expanding again," said executive Matt Walton."