Northrop to Cut 700 Jobs at Hawthorne Unit; Pentagon Actions May Cost 500 More
Northrop will eliminate at least 700 jobs at its electronics division in Hawthorne over the next seven months, resulting from a dearth of new contracts at the operation and an apparent phase-down in work on the firm’s MX missile guidance system.
The layoffs could be even larger, however, depending on business conditions and Pentagon decisions during the rest of the year. Northrop executives have told employees that as many as 1,200 jobs may be eliminated at the division, a 31% cutback of the 3,800 work force. The unit has already trimmed 200 jobs this year.
The layoffs will primarily affect engineers and white-collar engineering support jobs at the unit, which produces a variety of secret aircraft navigation systems and a key guidance device for the MX nuclear missile.
The MX program has been long troubled, and Northrop’s poor performance on the system was the subject of four congressional hearings last year. Northrop has been running behind schedule for five years, causing a shortage of guidance systems in deployed missiles in silos.
40% Lack Systems
Of the 38 missiles inside launch silos at F. E. Warren Air Force Base in Wyoming, 40% did not have guidance systems as of earlier this month, according to figures supplied by the House Armed Services Committee.
That represents a setback from last summer, when one-third of the missiles lacked guidance systems, which cost about $6 million each. It is not clear why the percentage of missiles without guidance systems is growing, even though the Air Force has said that Northrop is improving its deliveries.
Rep. Peter N. Mavroules (D-Mass.), a member of the committee and a critic of the program, termed the performance “incredible” and argued successfully last week during a House vote that MX missile funding should be cut from $500 million to $100 million in fiscal 1989.
The Air Force has said that Northrop now has a recovery plan under which deliveries will be back on schedule by this October. As of the end of April, Northrop delivered 79 guidance systems, known as inertial measurement units, leaving it nine behind schedule, according to the Air Force’s Ballistic Missile Office in San Bernardino. That represents an improvement over the backlog of undelivered units last year.
Some Payments Restored
The Air Force has also recently relaxed financial sanctions it had imposed on Northrop last year.
The Air Force suspended progress payments about one year ago on the MX system, but in an unannounced action last month restored 20% of those payments. Progress payments are made monthly to finance production at a defense contractor.
The Air Force is currently withholding $86 million from Northrop, down from a peak of $145 million. A staff member of the House Armed Services Committee said the committee was not aware of the Air Force action to lift some of its sanctions.
Northrop’s work on the MX is winding down, resulting in a need for fewer engineers, a company spokesman said. The “skills mix” of its work force is changing, resulting in a continuing need for production workers.
But news of the layoffs evoked a surprised reaction in Congress.
“I wonder how they are going to lay off 700 people when they are several months behind schedule in deliveries,” said a key aide to House Armed Services Chairman Les Aspin (D-Wis.). “They should be hiring people to produce those systems.”
Even though Northrop remains behind schedule, the amount of work remaining on the MX is shrinking. A company spokesman also said that work force requirements are declining because the company is becoming more efficient in its production methods.
In addition, the company now must share part of the market with a second producer, Rockwell International. The Air Force selected Rockwell to compete against Northrop after a history of problems with Northrop.
Although the Air Force plans to double its MX missile fleet in the future in a program known as a “rail garrison” basing system, Northrop will have to share production of future guidance systems with Rockwell.
If the Air Force wins congressional funding for its rail garrison system, it will need at least 62 more IMUs. The service will buy another 86 IMUs for its MX test program, according to the missile office.
In the most recent contract competition, Northrop was selected to produce 70% of the missile systems and Rockwell was awarded 30%.