Aerospace, Defense Firms Optimistic Despite Layoffs
Despite recent announcements of up to 5,200 job losses at Rockwell International and Hughes Aircraft Co. plants in the South Bay, the area’s aerospace and defense industries generally see good, even flourishing, economic times ahead.
Industry spokesmen said they base their upbeat forecasts on a continued high level of defense spending, buttressed by heavy demands for high-technology commercial products.
The Reagan Administration’s defense buildup has undoubtedly crested, the spokesmen said, but outlays in the next fiscal year are still expected to be in the $300-billion range, or more than twice the level of 1981 when President Reagan took office.
Much of the money will go into major projects that are moving from the drawing board to the production stage, such as the Stealth bomber, and others that are in early research phases, like the Strategic Defense Initiative--the space-based anti-missile system popularly called Star Wars.
The strong position of the defense industries appears to be matched by continued growth in the South Bay’s commercial sector, particularly in high technology and aerospace-related enterprises.
“Industrial and commercial activity around here has been in a boom period since 1983,” said Robert Seitz, president of the Torrance Area Chamber of Commerce. “Construction is at a very high level.”
The overall strength of the area’s economy, he said, is reflected in low unemployment rates. In Torrance, for example, the jobless rate is 3.3%, compared to the county’s average of 5.8%. The latest figures from the state Employment Development Department show 2.9% for Manhattan Beach, 3.8% in Redondo Beach and 4.8% in Hermosa Beach.
Early reports of job cutbacks at Rockwell and Hughes plants in El Segundo prompted city officials there to forecast revenue losses of up to $300,000, but City Manager Arthur Jones said this week that any drop in “head taxes” at those two firms should be offset by a continuing influx of workers to new office buildings.
At Hughes, the net job loss may turn out to be minimal, according to company spokesman Mike Murphy. He said Hughes will continue to hire engineers, technicians and other personnel as about 2,000 employees in El Segundo and at other South Bay facilities leave the payroll.
Hughes officials have indicated that the decision last month to trim the company’s work force by 5% did not stem from a loss of business, but rather from a need to cut costs and improve productivity in the increasingly competitive defense electronics business.
They said the cutbacks would be achieved through normal attrition and selective layoffs of workers who have not met job performance standards. The company was reported to have a backlog of $11.3 billion in defense and space contracts at the end of 1985 and new orders worth more than $7.3 billion.
The layoffs of 3,250 workers at Rockwell’s plants in El Segundo came as no surprise, since a rapid rise and fall of employment on the B-1 bomber was built into the company’s manufacturing program.
Rockwell expects to close down its B-1 operations in El Segundo and elsewhere by mid-1988 after completing 100 of the bombers, unless Congress takes up the company’s offer to produce 48 more at a cut-rate price--an uncertain prospect at this point in view of the Pentagon’s plans to switch to the procurement of Northrop’s Stealth bombers.
A Rockwell spokesman acknowledged last week that the end of the B-1 program will leave a void, “but we are doing everything possible to plug the gap.” He said the company is competing vigorously with six other firms for a contract on the next generation of fighter planes, called the Advanced Tactical Fighter, for assignments in the Star Wars field and for development work on the “Orient Express” aerospace plane announced early this year by President Reagan.
The Rockwell spokesman said the company also expects to take a leading role in the development of automated factory systems, but that effort will be centered in Milwaukee at the Allen-Bradley Co., which Rockwell acquired last year.
Rockwell’s El Segundo division, North American Aircraft Operations, would not be involved in building a new shuttle to replace the Challenger lost in the January explosion at Cape Canaveral. That work would be done at Rockwell facilities in Downey and Palmdale.
Employment at Northrop Aircraft Corp. is leveling off at about 20,000 workers at the company’s Hawthorne and El Segundo plants after rising by nearly 50% over the past six years.
Betting on F-20
Company spokeswoman Maria Oharenko said a big factor in future work at the South Bay plants will be the outcome of Northrop’s bid to sell 300 of its F-20 Tigershark fighter planes to the Air Force, which is also considering the General Dynamics F-16 fighter. A decision on which firm gets the contract is expected later this year.
Meanwhile, Oharenko said, Northrop’s South Bay plants are busy with other projects, including the Stealth bomber, the MX missile, military electro-optical electronics and drone target planes, along with ongoing construction of fuselages for Boeing’s 747 airliner and McDonnell Douglas’s F-18 fighterbomber.
Employment at TRW Inc. plants in the South Bay grew from 13,600 in 1980 to nearly 18,000 last year, company spokesman Tim Dolan said. He said the company expects comparable growth in 1986.
The company manufactures military, scientific and commercial satellites--175 have been produced so far, Dolan said--at its Space Park complex in Redondo Beach and Manhattan Beach. Other project areas, Dolan said, include work on advanced electronics, military software, Star Wars research and preliminary studies on a manned space station that the National Aeronautics and Space Administration plans to assemble in orbit in the 1990s.
Upswing at Douglas
Douglas Aircraft Co., which has plants in Long Beach and Torrance, expects a continued upswing in jobs and production over the next few years.
“We are in a hiring mode now and have been for more than two years,” said spokesman Don Hansen.
Starting at a low point of 15,000 jobs in 1983, he said, employment has risen to the current level of 23,000--with about 3,500 of those jobs at the Torrance fabrication and machining plant. Another thousand jobs will be added by the end of 1986, and then roughly 4,000 more by mid-1988, Hansen said.
The boom at Douglas, a division of St. Louis-based McDonnell Douglas, comes from a mix of commercial and military business. On the commercial side, Hansen said, the company recently delivered its 300th mid-size commercial jetliner, the MD-88, and has a backlog of orders and options for 400 more that should keep the plant humming into the early 1990s.
Douglas also is busy producing DC-10 jetliners and its military counterpart, the KC-10 transport plane, and should get even busier as it takes on the new C-17 military transport and the Navy’s T-45 jet trainer.
