TRW Reveals ‘Worst-Case Scenario’ for Layoffs
TRW’s announcement this week of up to 3,000 layoffs is a “worst-case scenario,” company officials in Redondo Beach say, and such extensive cutbacks may never occur.
But it is certain that some of TRW’s 30,000 Space & Defense Sector employees--18,000 of whom work in Redondo Beach--will be laid off, said Julie Wright, director of public relations for the division. She said officials could not estimate the minimum number of people who will lose their jobs or when the cutbacks will be implemented.
“We’re trying to be up front with our employees, and it’s difficult because it’s still just speculation,” Wright said.
TRW also has frozen hiring and rescinded job offers, Wright said.
The actions are tied to $33 billion in expected cuts in the national defense budget as part of efforts to reduce the federal deficit, she said. Which employees are laid off and what projects are cut depends on the future decisions of the Defense Department and Congress, Wright said.
Some TRW employees and aerospace industry sources have speculated that the main reason for the layoffs is the suspected cancellation of a secret military satellite program. Wright would not discuss the speculation.
Nationally, TRW’s Space & Defense Sector has more than 1,000 government contracts, she said. “That says we would likely be impacted in some way, but that also says that we’re diversified. . . . We think we’re going to come through this pretty well.”
The aerospace industry employs an estimated 150,000 people in the South Bay. Wright said TRW is not the only local company that will be hurt by the budget cutbacks.
“TRW’s estimate is that the total aerospace industry is going to be impacted, one way or another,” she said.
However, spokesmen for Hughes Aircraft Co., McDonnell Douglas Corp., Northrop Corp. and Rockwell International Corp. said that their companies are not planning any layoffs. Most said that if any contracts are canceled or extended, other positions could be found for any displaced workers within their own companies.
Nevertheless, some aerospace employees are worried.
“You can ask anyone from any of the big aerospace companies how they feel, because once one company starts laying people off, everybody starts thinking about it--including me,” said a Hughes engineer, who asked not to be identified.
TRW and Hughes used to be considered the two aerospace companies in the area where jobs were thought to be secure and could be kept until retirement, he added.
Hughes spokesman Mike Murphy said: “There are no layoffs expected as the result of any cancellations of government contracts. . . . Hughes is pretty well positioned because our largest contract accounts for only 6% of sales; our 10 largest account for less than 40% of our sales.”
More Than Routine Layoffs
TRW’s Wright and spokesmen for other aerospace companies said some routine layoffs take place each year as projects are finished and the employees’ skills are not needed in another part of the company. Wright said TRW is preparing for more than routine layoffs, however.
However, the only people laid off so far in conjunction with anticipated budget cutbacks, Wright said, were 11 people in Las Cruces, N. M. She said she does not know of any other specific contract cancellations or extensions or scheduled layoffs, but emphasized that the situation could change daily.
TRW’s human relations department is setting up a job assistance center to help displaced workers write resumes and find other positions within TRW or at other companies. The center will be in operation by Tuesday, Wright said, adding that the date is not related to any expected layoffs.
“We’re doing this with an awareness of what the worst-case scenario is,” Wright said. “If the worst-case scenario comes to pass, then we have mechanisms in place to help those affected.”
Wright said TRW has been calling other companies about openings “in the event that we do have people available. That’s part of planning.”
Hughes’ Murphy said TRW officials have not said exactly how many people will be laid off, “other than, obviously, it’s a significant number.”
Murphy said Hughes has some specialized technology openings on defense-related projects and may be able to hire some displaced workers from TRW.
“There’s a great demand for skilled people, double E’s (electrical engineers) particularly and computer science people,” Murphy said.
A McDonnell Douglas representative said: “We have a few selected openings, but we certainly wouldn’t be able to accommodate all the people they’re laying off.”
On Monday, employees received a memo from TRW Executive Vice President E. D. Dunford saying some layoffs are possible because of project terminations or “stretchouts”--extending a program over a longer period of time and thereby reducing the immediate dollars and manpower needed.
“The most severe personnel reduction possible would be 10% of our 30,000 employment base in the coming months,” the memo said.
Calming Fears
Wright said the memo was an attempt to allay fears sparked by rumors and misstatements that circulated in the company last week.
One TRW employee interviewed outside the company’s Redondo Beach complex on Wednesday said: “I think people are worried because they know there will be a cutback. I guess there will be a backlash of layoffs, but it’s common in this industry for people to move from company to company. We’ll lose a contract, but Rockwell or McDonnell Douglas will get one.”
The woman, an accountant, speculated that the engineers and other employees who work directly on the projects are in more danger of losing their jobs than the “support people,” such as accountants, secretaries and personnel employees.
Another employee said of the predicted layoffs: “There’s a lot of people talking about it, but I don’t see too much worry.”
TRW’s stock has not fluctuated significantly since it announced the projected decline in business. It closed Wednesday at 47.75 on the New York Stock Exchange, down 1.125. The previous Wednesday, it closed at 48.75.
