Northrop Plant in Anaheim May Be Sold

Northrop Corp. plans to cut its work force by 2,500 to 3,000 people by the end of the year and is likely to sell its Anaheim operation, which employs about 1,800 people, the chairman of the aerospace firm said Wednesday.

“When any of our properties is not useful, we will sell it. Certainly, Anaheim is one of those,” Northrop Chairman Thomas V. Jones told shareholders at the company’s annual meeting in Los Angeles.

After the meeting, Northrop spokesmen tried to temper Jones’ comments by stating that no final decision had been made about the the Orange County facility.

But company spokesman Tony Cantafio confirmed the existence of an internal report detailing a plan of liquidation for the Anaheim operation, including layoff and transfer figures.

‘Looking at Alternatives’

“We have a transition plan and a consolidation plan,” Cantafio said. “We’re looking at all of the alternatives.” He declined to discuss contents of the report.

The company would not comment on the extent of job losses that would accompany a sale of the Anaheim property, but it confirmed that any such layoffs would be included in the 2,500 to 3,000 planned job cuts.

Northrop’s work force reduction reflects an effort to trim overhead expenses throughout the company and to reduce jobs in the massive B-2 stealth bomber program.

At least some of the Northrop workers will be laid off, though the company hopes it can cut a majority of the jobs by normal attrition, Jones said. A majority of the job cuts will occur in Southern California, where about 77% of Northrop’s 44,000 workers are based.

Analysts speculated that as many as several hundred people could be laid off at the Anaheim facility. But the bulk of the layoffs are expected to come in the company’s B-2 bomber program, which is concentrated in Los Angeles County.

John Simon, an aerospace analyst at Seidler Amdec Securities, said the layoffs are more “bad news” for the troubled firm. “Why do you lay off people unless you have too many people?” he asked. “Things are going mostly wrong at Northrop.”

The company is facing a difficult time in many of its major military programs, ranging from technical problems that have forced delays to funding cutbacks that have slowed down production lines. Northrop expects its 1989 sales to remain little changed from last year’s $5.8 billion.

Northrop has already cut back 2,300 jobs on the B-2 bomber at its Pico Rivera and Palmdale plants in the past 2 years, resulting from completion of development activities and a failure to obtain funding increases for production.

Northrop declined to specify where the new job cuts would occur by plant location, but Cantafio said after the meeting that “a large number” of the job cutbacks would occur on the B-2 program.

Those layoffs were expected as development activities are completed, but recent federal budget cuts have robbed the program of funding increases that would have resulted in significant job growth. In addition, some of the B-2 layoffs will be tied to a cost reduction effort that Jones said is aiming to trim $3 billion from the cost of the B-2 program.

In March, Northrop announced it was trimming its operations in Anaheim by transferring 400 engineers and their support staff to a sister facility in Hawthorne.

Employees in Anaheim design and manufacture infrared and optical sensors used by pilots and anti-aircraft missile crews to shoot down their targets. They also manufacture equipment to test missiles.

The company’s Hawthorne operation, which employs 2,600 people, is best known for producing part of the U.S. Air Force’s MX missile guidance system.

The Anaheim and Hawthorne operations make up Northrop’s electronic systems division, which has suffered in recent years from production delays and declining revenue as several key programs have neared completion. From 1986 to 1988, the division’s revenue fell 13% to $1.1 billion, while its operating profit plunged 61% to $39 million.

In particular, analysts said the missile test equipment group in Anaheim and the MX missile project in Hawthorne have experienced significant revenue declines. Furthermore, production in Anaheim of a sensor product called a television camera set may stall because its primary application is the F-14 Tomcat fleet-defense fighter, which may soon be phased out of production.

“If you combine the declining revenues for test equipment and the (MX missile) unit, the consolidation of the facilities in Hawthorne and Anaheim makes a lot of sense,” said Lawrence M. Harris, an analyst at Bateman Eichler, Hill Richards Inc. in Los Angeles.

Real estate brokers said Northrop’s Anaheim facility, consisting of five buildings on 53 acres, is an attractive property. “They could get at least $27 million for the land alone,” said Bob Niles, a sales agent with Daum Commercial Industrial Real Estate in La Mirada. He said the buildings could bring $50 million to $70 million.

Niles said likely buyers would include other defense contractors and large computer companies. “There are lots of possibilities,” he said.

A 30-year-old industrial electrician at the Anaheim facility said workers there have heard that Northrop might sell the plant. “Everybody realizes the land is more profitable than what the company is doing with it right now,” he said.

Hawthorne Facility Bigger

The employee, who requested anonymity, said he expects to be transferred to Hawthorne, but he has started to look for another job because he doesn’t want to leave Orange County.

Northrop’s Hawthorne facility, situated on 218 acres, is considerably bigger than its Anaheim complex. “It probably wouldn’t be difficult at all for the Hawthorne facility to absorb the staff and work done in Anaheim,” Harris said.

The Northrop job terminations are another signal that federal defense spending reductions and a drive to improve efficiency by contractors is inflicting a heavy economic toll, especially in the concentrated Southern California aerospace industry.

Virtually every major prime contractor is laying off workers from at least some of their divisions in the Los Angeles area, including General Dynamics, Hughes Aircraft, Litton Industries, Lockheed and TRW, among others.

At Wednesday’s shareholder meeting, Jones did not specifically mention Northrop’s recent indictment on federal criminal charges, stemming from alleged falsification of testing on guidance parts for cruise missiles. He did say, “We intend to defend the company and our employees against unwarranted and frequently exaggerated charges.”

Jones delivered a 25-page speech, his final address to shareholders before he steps down after 30 years as chief executive at the end of this year.

Times staff writer Kenneth T. Yamada contributed to this article.

ELECTRONICS SYSTEMS DIVISION AT A GLANCE What: Northrop Corp., electronics systems division

Where: Anaheim

Employees: 1,800

Contracts: Builds optical and infrared sensors that enable pilots and anti-aircraft missile crews to identify targets. Also manufactures test equipment used to check Navy missiles.

Opened: 1951