In the aftermath of losing the $72-billion competition for the advanced tactical fighter, Northrop will eliminate 1,000 jobs by the end of the year, Chairman Kent Kresa said Wednesday.
About 600 employees will be laid off, and the balance of the jobs will be eliminated through attrition. Northrop has already cut 1,000 jobs in 1991 and is 11,000 jobs below its 1987 peak of 48,000, Kresa told shareholders at the annual meeting.
In a major strategic realignment, Kresa disclosed that the firm will create a new advanced technology and design organization for aircraft and a separate organization for commercial aircraft subcontracting. It currently builds the entire fuselage of the Boeing 747 jetliner.
The new design organization will include engineers and scientists from the firm's B-2 bomber division, its aircraft division and its research and technology center in Palos Verdes, Kresa said. The Palos Verdes center is being closed and the property sold.
Kresa did not identify other Northrop facilities that will be closed, but in an interview after the loss of the fighter competition he said the company would have to examine how to consolidate surplus facilities. In recent years, Northrop has closed plants in Anaheim, Ventura County and portions of its Hawthorne complex.
The announcement that Northrop will cut 1,000 jobs goes far beyond the Los Angeles-based firm's original estimate that it would cut 400 jobs after losing the fighter competition. A company spokesman said the jobs will be cut primarily at its aircraft division facilities in Hawthorne and El Segundo.
"I believe that the largest part of our force reduction is behind us, but probably not all," Kresa said. He added that Northrop is in better condition today than at any time in the last five years even after losing the fighter competition.
He did not say where the new aircraft design organization would be located, but it is likely to be at the firm's Hawthorne or Pico Rivera facilities, sources said. Northrop does its commercial aircraft work in Hawthorne but is transferring some of it to Georgia.
The elimination of 2,000 jobs at Northrop this year deepens the severe slump affecting the aerospace industry in California and nationwide. Earlier this week, a McKinsey & Co. report found that 60,000 aerospace jobs in the state have been lost the past several years. The report added that by the mid-1990s another 100,000 to 150,000 jobs could be lost if the state does not act to make its business climate more attractive.
Kresa called the B-2 one of "America's most successful programs." He said funding for the aircraft is in the defense budget, but Congress is attempting to chop away funds for other programs that the military services often do not want.
He said there was a "stealth majority" in the American public "who seem to better understand than some of the so-called experts what the stealth revolution can really mean to them and the United States."