CAREER PATHS : Tight Funding, Competition May Clip Wings for Aerospace

When General Dynamics needed to hire several thousand new employees at its Valley Systems division last year, it set up a special program to fire up its employment recruiters.

The company, which builds surface-to-air missiles for the Army and Navy at a facility in Rancho Cucamonga, awarded its top employment recruiter a leased Corvette.

But this year, the firm, under somewhat less pressure to find the qualified engineers that have been in such short supply, awarded its top recruiter only a color television set.

The story at General Dynamics illustrates how the the Southern California aerospace job market has cooled in the past year. Although General Dynamics’ work force is still growing, cutbacks at other firms have relieved the shortages of engineers that existed in the past few years.

While the defense and commercial aircraft industries remain vibrant and healthy, they have entered an era of less certain growth; only some companies will continue to enjoy the sort of robust expansion that every company had come to expect in recent years.

The dual effects of federal budget deficits and a more competitive environment in government contracting have put aerospace companies under sharp pressure to hold down employment, especially in those areas of overhead that do not fall under a direct government contract.

Although job opportunities are still plentiful, and even growing in many areas of the industry, most corporations have been finding it far easier to meet their recruiting needs than last year.

“A lot of companies were getting a lot of business in the past, but today only a few companies are getting a lot of business,” said Sandford A. Lechtick, president and chief executive of National Recruiters Corp., an aerospace headhunting firm based in Woodland Hills. “I would say the opportunities are not as great as they were a year ago. Things have cooled down across the board.”

Aerospace employment in California stood at 760,000 in August, up marginally from 755,500 a year earlier. In the Los Angeles region, aerospace jobs numbered 305,600, up from 296,600 a year before, according to the California Employment Development Department.

Jobs in the Los Angeles aircraft industry rose to 128,100 from 121,200 last year, thanks to the continued growth of commercial and military aircraft programs at Douglas Aircraft and Northrop. In the missiles and spacecraft sector, jobs rose to 19,300 from 18,500 last year, the EDD said.

The short-term outlook for the overall industry is for continued growth, but clearly at a more cautious level. In several years, the outlook could be far worse.

The Aerospace Industries Assn. of America, a trade group, recently projected a 2.6% growth rate in U.S. aerospace jobs during 1986, a much more moderate pace than the 5% annual rate recorded over the preceding three years.

Despite any general slackening of job conditions, the opportunities for engineers in selected specialties have not receded a bit, labor market specialists say.

Engineers in such areas as microelectronic circuit design, signal processing, composite structures, optical systems and artificial intelligence are all in short supply. Salaries for senior engineers or scientists in these specialties in non-management jobs can soar as high as $75,000 in some unusual cases, headhunters say.

The aerospace association noted tha the greatest rate of job growth in the last two years was a 7.7% annual pace for scientists and engineers.

One critical factor that should help offset any downturn in the employment market is the greater-than-normal rate of retirement that is looming in the defense industry. Retirement rates are expected to be high for a few years because many of the workers who got into the industry during its expansion around World War II are now coming due for retirement.

While that may help the job market, it will have little impact on the industry as a whole. The political outlook for the next several years appears to be for no better than zero growth in defense spending after adjustment for inflation.

Earlier this month, Congress approved a Pentagon spending bill for fiscal 1987 of $292 billion, a 3% reduction from the previous year, without considering inflation. That was a much larger cut than anybody had thought possible only six months ago and it will cause a disproportionately large ripple effect in the industry.

That’s because the Pentagon will be hard pressed to start new weapons programs with no additional funds or even a shrinking budget. Thus, the average age of existing weapons programs will rise, and it’s an inescapable fact that as defense programs mature, they require fewer workers.

“It takes fewer people to spend the same amount of money when a program matures,” Rockwell International Senior Vice President Bastian (Buz) Hello said earlier this year.

Many Reagan Administration programs have already reached their peak and are now shrinking, the most notable of which is the B-1 bomber. Rockwell, prime contractor on the B-1, has been laying off 6,800 workers around the nation ij recent months, the majority in Southern California.

Overall, Rockwell employment has dropped to 45,442 from 47,177. By the end of the year, it will fall to 43,152.

In addition to the budget crunch in the aerospace industry, the space shuttle disaster earlier this year has created another obstacle. The Challenger explosion has halted many programs and will undoubtedly delay many others, such as plans for an orbiting space station.

The usually robust Rockwell space operations have taken a beating, due in part to the shuttle disaster. At Rockwell, space-related jobs declined from 16,858 at the beginning of the year to an expected 14,452 at the end of 1986.

Hughes Aircraft also has had a downturn in its satellite manufacturing operations. Overall, the company recently announced a plan to cut employment by 5%.

The modest employment gains in the last year in the spacecraft and missile area is attributable to strategic and tactical military missiles more than large launch systems and spacecraft. General Dynamics Pomona has been a notable leader in that area this year.

Despite the bleak federal budget outlook, most experts doubt that a precipitous decline in aerospace jobs is imminent. For one thing, there remains a $142.5-billion backlog of defense programs enacted earlier in the Reagan Administration. That monumental sum should continue funding a great deal of defense work for several years.

And unlike the painful aerospace recession that followed the Vietnam War, public sentiment has not turned against the military. The cutbacks result from fiscal pressures, which are likely to do less damage to the industry than the political furor that occurred before.

In addition, the commercial aircraft industry has had an enormously successful year. Douglas Aircraft, for example, has production commitments on its MD-80 series of aircraft until 1992, and Boeing has set a torrid sales pace for its 737 and 747 aircraft.

Southern California subcontractors play an important role in supply parts for those commercial aircraft. Garrett AiResearch, Litton Industries and Northrop are just a few examples of firms that are major suppliers to Boeing’s commercial jetliner business.

Even amid the existing defense austerity, some companies are conducting huge hiring campaigns.

McDonnell Douglas and General Dynamics are building up payrolls as though the Reagan Administration were just coming into office.

A year ago, employment at General Dynamics’ Valley Systems division stood at 1,600. Today, it stands at 2,500 and by year’s end, it will grow to 2,700, said Larry McMillan, vice president of human resources at the unit. By 1989, the division expects to employ 5,000.

The rapid job growth will be accomplished more painlessly in today’s job market than in the past, McMillan said.

“Two months ago, we needed 20 buyers. We put an ad in the paper and 400 people showed up to apply,” he said. “That’s a much greater response than we would have had a few years ago.

Douglas Aircraft is also in the midst of a major buildup for its C-17 Air Force cargo jet program and its T-45 Navy jet trainer program, both of which are now in full-scale engineering development. The recent spending bill approved by Congress contained funding that will enable both programs to enter their production phases, as well.

Employment at Douglas facilities in Long Beach and Torrance has soared to 25,500 from 19,700 a year ago. The firm has been adding 200 to 250 employees per month, such a heated pace that it has seen little improvement in its ability to attract applicants.

TRW, typically one of the more stable aerospace companies, has increased its Los Angeles-area employment to 19,000, up 1,000 in the last year. In 1986, the firm will hire 3,000 people, to cover attrition and to add as many as 800 to its staff, according to Julie Meier Wright, a TRW spokeswoman.

Northrop employment has been on the wane. The firm recently announced layoffs of 350 at its Northrop Electronics division in Hawthorne and 400 at its Electro-Mechanical division in Anaheim. Its total employment stands at 32,000 in Southern California and 44,500 nationwide.

Lockheed California Co., the Burbank-based military aircraft producer, said its employment now stands at 16,568, down from 17,700 last year.

The outlook for stingy increases in defense budgets over the next several years does not conform to Pentagon plans for major programs.

The Air Force plans to start the advanced tactical fighter and the C-17 cargo jet. The Navy wants a new attack aircraft and new destroyers. The Defense Department plans large increases in funding for the Strategic Defense Initiative, or “Star Wars.” And NASA still plans to build a new space shuttle and a space station, work that will all be done in Southern California.

If all of that comes to pass, the aerospace job market will be healthy for years to come. But first, experts say, Congress will have to give NASA and the Defense Department a budget that will outpace inflation.