Douglas Aircraft in Long Beach to Lay Off 1,000 : Aerospace: The parent company is under pressure to curtail costs and conserve cash. The Pentagon has held up funding for the C-17 cargo jet.

McDonnell Douglas said Friday that it will lay off 1,000 workers at its Douglas Aircraft unit in Long Beach, a move that comes amid enormous pressure on the corporation to curtail its costs and conserve cash.

Undersecretary of Defense Donald J. Yockey has held up funding of the most recent Douglas contract for the C-17 cargo jet out of concern that the cost of future production will continue to grow.

Meanwhile, Lockheed, which produces competing cargo jets, has circulated rumors on Capitol Hill alleging that the C-17 has serious technical problems and will require a major redesign, according to congressional and Air Force sources.

Lockheed officials have alleged that the C-17 is improperly balanced and will require a redesign to move its wing 18 inches toward the rear of the aircraft, the sources said. They are circulating proposals to sell their own C-5B cargo jet.

Lockheed denied Friday that it has lobbied against the C-17 or for its C-5B.

But a senior Air Force official said Friday: “Lockheed is trying to cast doubts on this airplane. They are just trying to drum up business.”

In a virtual fight for its survival, McDonnell Douglas has been working to cut costs by laying off workers and taking extraordinary financial measures in recent months.

The firm has pledged the stock of its Arizona-based McDonnell Douglas Helicopters unit to the Internal Revenue Service to secure unpaid income taxes for 1977 through 1980, the firm disclosed this week in congressional hearings. The helicopter operation produces the Army Apache and the commercial MD-500 aircraft.

McDonnell spokesman Andrew Wilson said Friday that the unpaid taxes, which are in dispute, amount to as much as $300 million. The firm’s recently issued annual report says the firm expects those to be offset by “carrybacks” from more recent years once those taxes are resolved with the IRS.

The layoffs at Douglas will occur mostly at the firm’s Long Beach plant, which currently employs 35,600. But smaller cutbacks will also be made at plants in Utah, Ohio and Georgia. Since January, Douglas has eliminated 800 additional jobs.

The layoffs will affect mostly administrative and support functions at the company and be spread out over all of the firm’s programs.

Douglas has been under considerable competitive pressure on its commercial programs and under sharp fire by its Pentagon customers to hold down costs.

A memorandum issued in late March by Yockey, the defense undersecretary, instructed the Air Force to hold up full funding of the C-17’s third production lot until Yockey is provided with detailed costs and schedules for the fourth production lot. Yockey was reportedly worried that the C-17’s cost would soar in later years as McDonnell attempts to recoup losses on the program. The aircraft is scheduled to take its first flight in June.

In addition, the memorandum, which was obtained by The Times, confirms that the Air Force has relaxed certain specifications for the C-17, including a reduction of the payload capacity of the aircraft by 7,000 pounds.

Air Force officials said the reduction was accepted because efforts to maintain the full capacity would drive up the aircraft’s cost.

The plane was supposed to carry 167,000 pounds over a range of 2,400 miles, but that was reduced to 160,000 pounds over the same range, according to Col. Charles Seifert, deputy program manager. The reduction occurred because the weight of aircraft has grown considerably above original design limits.

It is that weight growth that has become a concern to the Air Force and has been seized upon by Lockheed in disparaging the aircraft.

Lockheed officials have implied that the weight growth has occurred mainly at the rear of the aircraft, around the highly reinforced cargo loading ramp door, and has contributed to an imbalance of the aircraft.

If that were true, the C-17 would not be able to drop cargo out of its ramp door while flying a few feet off the ground, a key capability of tactical cargo planes. As the cargo slides out of the plane, the weight suddenly shifts to the rear and can cause the nose to pitch up.

The Air Force’s Military Airlift Command has conducted a study of the potential for sudden pitch up and loss of control, concluding that the C-17 will not be vulnerable to such an event, a senior official at the command said. Seifert also denied any loss in the capability to drop cargo.

But Lockheed officials have implied in meetings with congressional staffs, including that of the House Energy and Commerce Committee, that the C-17 is vulnerable and the problem can be fixed only by moving the wings 18 inches to the rear. Such a redesign would undoubtedly cost hundreds of millions of dollars.

Lockheed has proposed selling the Air Force C-5B cargo jets at a cost of $150 million each, substantially less than the C-17. But the Air Force asserts that the C-5B is not as capable of performing the same missions as the C-17.

“We are not lobbying against the C-17, nor for a restart of the C-5,” a Lockheed spokesman said Friday. “We have responded to customer requests on several occasions for information regarding the C-5, but we were emphatically not lobbying against the C-17. We have a very clear policy on this.”

An Energy and Commerce Committee staff member disputed that, saying that Lockheed requested the meeting and had “shopped its briefing all over the Hill.” He added: “I don’t know why they are running for the hills. It was an appropriate attack and an issue that ought to be dealt with.”