Loral Plans to Cut 25% of O.C. Jobs : Economy: The Newport Beach company joins the list of several local aerospace firms that have announced major layoffs.
The defense slowdown hit one of Orange County’s oldest military contractors hard Friday when missile maker Loral Aeronutronic announced plans to slash 592 jobs--nearly 25% of its local work force--by July.
Company officials also said that a decision on whether to move the 32-year-old defense plant from its current site in Newport Beach has been put on “indefinite hold” because of the uncertainty of Pentagon budget proposals.
The layoffs began last week when Loral Aeronutronic, manufacturer of the Sidewinder missile used by U.S. forces during the Persian Gulf War, laid off 242 managers and production workers, said Joe Tedino, a spokesman for parent company Loral Corp. in New York. Another 350 jobs will be eliminated in phases by July 1, shrinking the plant’s work force from 2,500 to less than 2,000.
The Newport Beach plant hasn’t had such a large layoff since 1985, when 1,300 workers lost their jobs after the Pentagon canceled the controversial Sgt. York anti-tank gun.
Not surprisingly, the talk at the company’s parking lot Friday afternoon was all about the layoffs. Some workers were worried about the prospect of pink slips, while others, like Dod Evans, had already received the bad news.
Evans, a 45-year-old machinist, was told she will be out of a job in four weeks.
“I’m just worried I won’t be able to get a job in California with the aerospace work gone,” she said. “I may have to move out of state to get a job.”
Michael Wilson, an assembler, said he was told his last day will be Feb. 14. “There’s nothing out there unless I’m gonna work for $4.50 an hour, and I can’t live on that,” he said.
Loral joins other big Orange County aerospace firms--McDonnell Douglas in Huntington Beach, Hughes Aircraft in Fullerton and Rockwell International in Seal Beach and Anaheim--that have shed large numbers of workers in recent years. High-tech employment in Orange County has shrunk from a peak of 96,000 in 1987--near the end of President Reagan’s massive defense build-up--to 83,000 in 1991.
Esmael Adibi, a Chapman University economist, estimates that the county will lose another 2,000 high-tech jobs this year, mostly in defense.
“This is a painful process we have to go through and eventually we will get out of it as companies put more emphasis on commercial business,” he said.
Loral’s Tedino said Pentagon budget cuts “have affected nearly all of our programs in production and development. This is the (layoff) plan that we see over the next six months.”
The defense climate has changed dramatically since August, 1990, when Loral Corp. acquired Ford Aerospace, the defense subsidiary of Ford Motor Co. (Loral renamed the division Loral Aeronutronic.) At the time, Loral officials said they expected to prosper despite shrinking Pentagon budgets by focusing on segments of the business that were growing.
But the end of the Cold War has created growing demand for bigger military spending cuts. The defense industry is nervously awaiting the Pentagon’s budget proposals, due later this month. The Bush Administration is considering a freeze on new weapons production, a plan that could cost thousands of jobs in Southern California. The proposal would emphasize weapons research and development work.
The Army has notified Loral that it is halting future purchases of Chaparral air-defense missiles, which the Newport Beach unit has made since 1965. That decision will likely scuttle Loral’s work on a program to develop an advanced guidance system for the Chaparral, Tedino said.
Loral’s Sidewinder AIM-9R missile development program--once described by Loral Chairman Bernard Schwartz as the division’s most important future program-- may also be in trouble. Production of various versions of the air-to-air missile has slowed, Tedino said. And the trade journal Defense News reported this month that the Pentagon plans to cancel the AIM-9R missile. Tedino acknowledged the program’s future is in doubt.
“I think we’re losing the core of our production jobs here,” said Michael Beltramo, a Los Angeles defense consultant. “I think it’s as grim as can be for Southern California.”
Beltramo estimates that the Southland’s slice of the Pentagon pie could drop by 1993 to 29% of the total sales recorded in 1987, a peak year.
Loral’s lease for the 99-acre Aeronutronic plant on Jamboree Boulevard in Newport Beach expires in 1998. By 1996, the rent on the property will increase from about $92,000 a month to $1 million a month.
Consequently, Loral officials said in July, 1991, that they were scouting for a new Orange County location for the Newport Beach engineering and administrative operations and might move Aeronutronic’s missile production out of Southern California. Tedino said there now are no immediate plans to move the plant.
“We’re not sure of our own space requirements, so it doesn’t make sense to find a new location until we find out,” he said. “There is no new timetable.”
Employees will be notified a month in advance of their layoff and will receive unspecified severance pay based on length of employment, Tedino said.
Times staff writer Donnette Dunbar contributed to this report.
Loral Aeronutronic Employees: 2,500 in Newport Beach (before layoffs). * General manager: James Woolnough. Corporate parent: Loral Aerospace Corp. in Newport Beach, a subsidiary of Loral Corp. in New York. Major Programs: Manufactures the guidance systems for the Air Force’s Sidewinder air-to-air missile. Manufactures the Chaparral ground-to-air missile for the Army. Manufactures Nite Hawk electronic warfare gear, called a forward-looking infrared pod, for the Navy’s F/A-18 combat aircraft. Manufactures control valves for the Navy’s Trident submarine. Developing antitank missile, the Short Range Antitank Weapon, for the Marine Corps. Developing alternative guidance system for the high-speed anti-radar (HARM) missile seeker for the Navy. * A more precise figure was not available from the company.
