TRW to Reorganize Space, Defense Sector as Pentagon Spending Falls
TRW announced Wednesday a major reorganization of its space and defense sector in Redondo Beach, responding to the dismal outlook for Pentagon budgets and a company goal to increase its market share.
TRW Executive Vice President Edsel Dunford, who heads the 27,500-worker sector, said the realignment will not result in any loss of jobs.
About 1,200 of the sector’s workers were laid off last year, and another 1,800 jobs were eliminated through attrition, but Dunford said the employment situation has stabilized and the operation is now adding workers in some areas.
TRW, based in Cleveland, hopes that the reorganization will position its resources more efficiently in an era when defense markets will be shrinking and competition for contracts is increasing.
“When you are growing rapidly, you add a lot of new capability,” Dunford said. “In a tougher market, you want to make sure you use those capabilities in the best way.”
‘Not Related’ to Performance
He said TRW became the nation’s 18th-largest defense contractor in 1988, up from 21st the year before, indicating that the company had gained market share. Meanwhile, its ranking in space agency contracting and in research contracting was unchanged, he said.
Dunford said the reorganization announced Wednesday was not related to weak profit performance or to problems with any of the firm’s programs. TRW’s space and defense business suffered a 12% decline in operating profit for 1988, even though sales rose 2% to $3.18 billion.
Dunford called the decline an “anomaly” and “not a systemic decline of profits.” He blamed it on costs related to development under a fixed-price contract of a classified communications system.
TRW moved out of 23 leased buildings during 1988 in an effort to reduce its costs and increased the density of workers in company-owned buildings, Dunford said.
Reduced Federal Funding
Separately, TRW faces a number of risks in the coming congressional conference on the defense authorization bill. The House of Representatives has voted to kill the $22-billion Milstar communications satellite program in which TRW is a major subcontractor to Lockheed.
“We have quite a few hundred people working on Milstar, and it would mean phasing those people out,” he said about a contract cancellation.
Also, reducing federal funding has slowed down TRW’s program to build the orbital maneuvering vehicle, a type of tow truck for satellites. And its advanced X-ray observatory spacecraft is having a slow start while the feasibility of its mirror system is tested, he said. A third TRW spacecraft, the gamma-ray observatory, is ready for shipment to Florida for launch in the second quarter of next year, he said.
Under its reorganization, TRW’s space and defense sector will be composed of four realigned groups of roughly equal size, focusing on spacecraft, space electronics, other military electronic equipment and software.
Consolidate Work
The company also shifted the headquarters of one of the groups from Redondo Beach to Fairfax, Va., and that of another from Sunnyvale to suburban San Diego. Dunford said the company’s primary growth will take place in Fairfax and that the company does not plan to add a significant number of jobs at its Space Park location in Redondo Beach.
The new Systems Integration Group will consolidate TRW’s extensive work in the field of putting hardware and software together in complex systems. TRW also combined its spacecraft production group with its ballistic missile division, which is the Air Force’s engineering adviser on all U.S. land-based strategic nuclear missiles.
It also named Donald L. Jacobs, former chief of its Defense Systems Division, to vice president and deputy general manager in the new sector executive office to improve “internal processes and procedures.”
