Disenchanted Rohr to Shift Jobs Out of State
Confirming reports that the company plans to move some jobs out of California, the chief executive of Rohr Industries says the aerospace manufacturer would not locate in California if it were starting up today.
Robert Goldsmith, who heads the Chula Vista-based concern, thus joined a growing chorus of California aerospace employers who have expressed displeasure with the high cost of doing business in Southern California.
High taxes, labor and energy costs combined with building-permit delays have put Rohr’s South Bay plant increasingly at a competitive disadvantage in the global marketplace, he said. As a result, the company has added manufacturing capacity at several out-of-state locations in recent years, rather than expand in Chula Vista.
“If Fred Rohr hadn’t been born in San Diego, we wouldn’t be here today,” Goldsmith said in a reference to the company’s founder. A former Boeing engineer, Rohr founded the company, a manufacturer of jet engine nacelles, rings and other aircraft components, in Chula Vista in 1940.
In an interview at the company’s headquarters, Goldsmith said the manufacturer will reduce its 6,300-worker payroll in Chula Vista by at least 500 over the next two years and to a total of 5,000 workers “plus or minus 1,000” by 1996 as it moves some operations out of state. The company’s Riverside plant will also be hit with some job reductions, he said.
Many of the positions eliminated will be manufacturing jobs that can be filled by cheaper labor out of state. But some of those job losses will be compensated by the hiring of more engineers and other “professional” workers here, Goldsmith said.
Goldsmith also said the company, which has 11,600 employees worldwide, will vacate a large but still undetermined chunk of its 185-acre plant on southern San Diego Bay.
Goldsmith said the final number of job reductions will depend on the economy, but he left no doubt that Rohr’s long-term strategy is to move much of its labor- and energy-intensive jobs out of state. In recent years the company has built new plants in Arkansas, Texas and Maryland, rather than expand in California to fill its growing backlog of orders.
Reports of planned job cutbacks have been circulating for months at Rohr, one of San Diego County’s largest manufacturers. Although Goldsmith and other Rohr officials have discussed the planned reductions with employees and Chula Vista city officials, the company had previously declined to publicly confirm or deny the reports.
Business at the company has grown substantially since 1985 along with the huge upturn in orders for commercial airliners. Among Rohr’s top customers are Boeing, McDonnell Douglas and Airbus. Rohr’s revenues grew to $1.078 billion in fiscal 1990 from $626.7 million in 1986.
But most of the company’s new manufacturing capacity has been added out of state, Goldsmith said, partly because the state’s tough regulatory climate makes it tougher and tougher for California manufacturers to get permits to build new plant capacity to meet higher volumes of orders. Of Rohr’s 11 plants, three are in California, seven in other states and one in France.
“What California is heading toward is stability for people in jobs regulating things and not for stability in jobs for people making things,” Goldsmith said.
Goldsmith said the same plant that took seven months for Rohr to build in Arkansas--from building-permit application stage to finish--would have required at least three years to build in Chula Vista.
“Getting a building permit here is like swimming through peanut butter,” Goldsmith said. Rohr only paid $750 for building fees in Arkansas but would have paid $750,000 in fees to build comparable buildings in California, he said.
Rohr, the only Fortune 500 company with headquarters in San Diego County, plans to move some of its energy-intensive production to a new 100-acre San Marcos, Tex. plant because power there is 25% cheaper than in Chula Vista.
The Rohr executive said the order rate of commercial aircraft by airlines peaked at 1,700 new jetliners in 1989, falling to 1,000 in 1990 and to an expected 500 planes this year. But Goldsmith said Rohr’s prospects are good because an aircraft order has a 25-year life span in spare parts, service and replacement.
Also auguring well for companies such as Rohr are the long-term trends in increased commercial airline passengers, growing at an annual rate of 4% to 6% in recent years, as well as accelerating orders by package carriers such as Federal Express and DHL, and by state-run airlines in the Soviet Union and Eastern Europe.
