Revamping at TRW Will Trim 10,000 Positions

TRW announced a major downsizing Wednesday that will eliminate 10,000 jobs, heavily affecting its information systems and services business in Orange County and its automotive business in the East but largely sparing its huge defense operations in Redondo Beach.

The Cleveland-based firm said it wants to sell operations that have performed poorly or are considered “non-strategic,” a group that includes at least three units in its information systems and services operations.

Chairman Joseph T. Gorman said in an interview that 7,500 jobs will be shed in the divestitures, about half in information services and half in automotive. In addition, 2,500 jobs will be eliminated from continuing operations, cuts that will be spread throughout the company.

TRW’s real estate loan services company, with 220 employees at its headquarters in Orange, is among those for sale. The other two information units on the block are in Dallas and Fairfield, N.J.

The operations slated for sale had 1990 revenue of $890 million out of the firm’s $8-billion total. Gorman did not indicate which other operations will be sold. But the firm will not divest its credit reporting unit, which earlier this week settled federal allegations that it had compiled inaccurate personal credit information.

Gorman said “relatively modest numbers” will be cut at the Space and Defense Sector in Redondo Beach, which he characterized as in healthy condition with a relatively stable employment outlook.

The operation, a major producer of military spacecraft and military electronic systems, has increased its new-contract awards by 35% in the first nine months of this year, resulting in a growing backlog despite the sharp downturn in the defense market, Gorman said.

The Space and Defense Sector employs 23,500, of which 14,000 are in Redondo Beach, 2,000 in Sunnyvale and 750 in San Diego.

“We have a wonderful future,” Gorman said of the defense business. He noted that the Internal Revenue Service awarded the firm a $300-million contract Wednesday to modernize its information system, a program that is representative of the new lines of work that he hopes the operation can move into.

Gorman said the firm’s remaining businesses have “huge growth opportunities,” but its financial and management resources are “finite,” indicating that he plans to better focus the company. Gorman said TRW will cut its annual interest costs by $36 million by reducing its debt from 42% of capital to 35%.

TRW said the restructuring, which will result in a one-time after-tax charge of $250 million, will reduce annual expenses $400 million to $500 million. In addition, the firm will cut its 1992 capital spending by more than $100 million.

Priscilla Luce, a TRW spokeswoman, said the restructuring will hit operations in Orange harder than those in Los Angeles County.

“We believe that the impact of the restructuring on the Los Angeles area will be minimal,” she said.

TRW’s Information Systems unit has 2,000 employees in Anaheim and Orange. In Southern California, it has 16,600 employees.

The last major restructuring at TRW was in 1985, when it sold off its industrial products, energy products and aircraft components businesses.

The restructuring comes amid an economic slump, and TRW spokesman Michael J. Jablonski conceded that it will not be easy looking for buyers. He said if the subsidiaries can’t be sold, the company will look for partners in similar areas to help run them.

“This is not a fire sale,” Jablonski said. “We’re going to try to get a fair price for these businesses, that’s why we’re selling them over an 18-month period.”

Employees at TRW’s Information Services unit in Orange are apprehensive but not surprised by the announcement.

“The numbers are scary, and the newspaper finds out things before we hear about it,” said an employee who asked not to be identified. Such a move could be expected, “especially with the economy the way it is,” she said.

Another employee added: “It’s really too soon to know whether it’s going to affect us.”

Times staff writer Chris Woodyard contributed to this report.