Northrop Silent on What Facilities It May Close : Aerospace: Defense cutbacks may most affect operations in Ventura County, Hawthorne and Palos Verdes.
Beleaguered Northrop is considering the shutdown of “non-productive” facilities, but the company is being stealthy about which locations are the most likely to be closed.
“We are not going to answer ‘what if’ questions,” a spokesman declares.
Shutdowns would have the most impact on the Los Angeles-based aerospace firm’s Southern California employees, who represent 75% of its work force. Most at risk are employees at the Ventura County operation, the sprawling Hawthorne facilities and the hilltop Palos Verdes research center.
At Northrop’s annual shareholders meeting, President Kent Kresa said: “We are going to continue to sell non-productive assets--those holdings that don’t match the business environment we see ahead of us or where we feel better use can be made of the assets.”
The company will eliminate 3,000 of its 41,000 jobs this year, after having eliminated 2,500 last year, Kresa said. With fewer people, the company will be left with more space than it needs.
So far, the firm has sold its corporate headquarters in Century City and a manufacturing plant in Anaheim. At the end of 1989, it owned 12.9 million square feet of office and factory space, and it was leasing 5.6 million feet. Leased space was down 400,000 square feet from the previous year.
Northrop has tried to sell its Palos Verdes center in recent years but was thwarted by city regulations that prevented potential buyers from establishing light-industrial operations on the property, according to industry sources.
“It is a gorgeous property,” one source said. “A lot of it has an ocean view. It has an area with swans in it.”
The facility is out of sync with pressures for austerity in the aerospace industry arising from defense budget cuts and programs being canceled, the source said. The cuts have resulted in excess space for Northrop in a number of places, including Hawthorne, El Segundo and Ventura County.
The firm has owned its Ventura County facility in Newbury Park, worth as much as $132 million, since the early 1960s. It has 2,000 employees. After developing the Tacit Rainbow cruise missile in Ventura, the company elected in the mid-1980s to build it in Perry, Ga. Sources say Northrop had planned at one point to build the missile at a new plant in Santa Maria, but that facility has been sold.
Employees in Ventura have grown increasingly concerned amid mounting speculation that Northrop will sell the facility and move remaining programs to Hawthorne or Georgia. “You are right on the edge of your seat,” an employee said. “The attitude is that is going to happen at any time.”
In its aircraft and missile sectors, Northrop owns dozens of old buildings in Hawthorne and El Segundo, intermingled with newer facilities. Because Northrop has invested heavily in research facilities in Hawthorne, it is unlikely to abandon the Hawthorne facility entirely--in contrast with Lockheed’s move from Burbank. Lockheed recently announced that it would relocate several major programs to Marietta, Ga.
“This is a cost-cutting effort,” said Northrop spokesman Tony Cantafio. “We may shift things around from one facility to another. If we do, it may cause excess capacity. And if it does, we may sell that excess capacity or we may not renew leases.”
Lawrence Harris, an analyst at Bateman Eichler, Hill Richards, estimated that Northrop owns 218 acres of land in Hawthorne, worth $410 million. Harris speculates that Ventura and a substantial portion of Hawthorne could be sold off to help reduce the firm’s $1 billion in debt. Kresa said the firm aims to be debt-free by the mid-1990s.
Having lost a number of programs, the industry source said, the company needs to consolidate. He noted that the firm ended production of the F-5 fighter last year and lost a competition to continue production of a key piece of the guidance system for the MX missile.
Thus, Northrop has excess space at its electronics division in Hawthorne and at its aircraft line in El Segundo on Imperial Highway.
The company is unlikely to move production of the F-18 fuselage from El Segundo or the Boeing 747 jetliner fuselage from Hawthorne. Large jigs used to produce those parts would be difficult to move and very costly to recalibrate at new sites.
The firm’s electronics division in Hawthorne has a relatively new assembly building for missile guidance systems. Although it lost the MX program, it is believed to be building a guidance system for the B-2 bomber at the unit. It is unclear whether that building could be vacated or not.
But Northrop has dozens of small buildings scattered about the Hawthorne area that are strong candidates for abandonment, sources said. The buildings, painted drab brown in the Northrop color motif, house many of the design operations for the advanced tactical fighter program.
Kresa said the company would locate the ATF development program, if it wins a competition against rival Lockheed, at its B-2 bomber operation in Pico Rivera. That decision should free up some space in Hawthorne. It also appears to be a strong commitment for Northrop’s Pico Rivera plant, which Kresa called the “most modern aircraft development and manufacturing facilities in the nation.”
Times staff writer Tina Daunt contributed to this story.