Lockheed Will Lay Off 2,000 in Southland
In another sign that the local aircraft industry is slowing down, Lockheed Corp. said Friday it will lay off 2,750 salaried and hourly employees in its aircraft division, including 2,000 in Southern California.
The company attributed the cuts at its Lockheed Aeronautical Systems Co., which were expected, to the shrinking defense budget and the completion of some major defense projects, such as the contract to build the F-117A Stealth fighter plane.
Lockheed, based in Calabasas, was not alone Friday in announcing defense-related cuts. General Electric Co. said it would eliminate 4,200 jobs over two years at GE Aerospace plants in New York and New Jersey.
And the Lockheed announcement came only a day after McDonnell Douglas Corp. said it would cut 3,000 white-collar jobs at its operation in Long Beach, where its commercial and military aircraft divisions have suffered financial and production problems.
“It’s just a sign of the times,” said Jerry Cantwell, an industry analyst for Wertheim Schroder & Co. in New York, citing growing pressure to reduce military spending. Lockheed spokesman Jim Ragsdale, however, said the layoffs were not directly related to Defense Secretary Dick Cheney’s announcement Thursday that he will seek $34 billion in spending cuts over the next six years.
About 1,700 jobs will be eliminated at Lockheed’s sprawling plant in Burbank, 200 at its Palmdale plant and about 100 at a research center in the Santa Clarita Valley. The remaining 750 layoffs will occur at Lockheed’s Marietta, Ga., facility. Most of the layoffs are expected to be implemented by July.
The layoffs represent about 16% of the aircraft division’s local employees, and about 12% of its employees nationwide. “Slightly more than half” of the layoffs will be among salaried employees, Ragsdale said.
Lockheed has already cut about 9,000 aircraft division jobs since 1988, when it began to scale down production of the C-5B cargo plane. And the company said the situation was not expected to brighten soon.
“It is unlikely we will have any large new military aircraft production project that will begin before the mid-1990s,” Ken Cannestra, president of Lockheed’s aeronautical division, said in a statement.
Lockheed does not have any specific forecasts of more layoffs, but “it is possible we could see some more,” Ragsdale said.
Union officials seemed resigned to the cuts. “It’s an unfortunate situation,” said Don Nakamoto, spokesman for District 727 of the International Assn. of Machinists and Aerospace Workers. “We understand that their business is declining.”
The Lockheed layoffs did not surprise city officials in Burbank, who recalled the company’s announcement a year ago that it plans to move its operations out of the area eventually. City officials said the layoffs also will hurt the local businesses that provide materials and services to Lockheed.
“We don’t like to hear about any economic condition that causes residents and employers to reduce their work force,” said Stephen Helvey, Burbank’s assistant city manager. “It’s obviously going to have some impact on our economy; it will be tough to know what that impact will be until we see what Lockheed’s continued use of the facilities will be in the city.”
But officials said that even an entire pullout would not send the city into a tailspin. In fact, it could help the city by freeing up the land for more revenue-producing uses such as retail stores, City Councilwoman Mary Lou Howard said. Also, the property tax base would jump if the land were sold and assessed at a higher value, the officials said.
Lockheed Chairman Daniel M. Tellep might feel under pressure in the future to cut costs elsewhere in the company, said analyst Lawrence M. Harris, with Bateman Eichler, Hill Richards in Los Angeles. Harris noted that Tellep and his management team only recently prevailed against financier Harold C. Simmons in a bitter proxy battle for control of Lockheed.
“In the wake of the proxy fight, Mr. Tellep has indicated increased emphasis will be placed on profits and cash flow, which means each of the units of Lockheed will be getting a closer look,” Harris said.
Lockheed last year delivered its last C-5B transport plane and TR-1 reconnaissance plane to the Air Force and expects to deliver the last F-117A this year. Lockheed will build only six more P-3 anti-submarine planes--for Canada and Pakistan--by September, 1991.
Times staff writer Lynn O’Shaughnessy contributed to this article.
