Hughes Aircraft to Close Division in South O.C.

In a blow to one of the county’s “master-planned” communities, Hughes Aircraft Co. plans to close a division here by midyear and move the operation to Carlsbad, clouding the future of nearly 500 employees.

The decision, announced Wednesday by the aerospace giant, is a setback for the Santa Margarita Co., which manages the 5,000-acre residential community and business park. Hughes is the biggest tenant and a central part of the developer’s plan to create “one of Southern California’s most dynamic corporate environments,” where residents can live, work and shop in a self-contained community.

Hughes, which has cut thousands of jobs throughout the corporation since 1986, is combining two divisions into one, said William Herrman, a Hughes spokesman. Herrman would not say how many jobs will be eliminated, but Hughes employees said they were told that only about 100 Rancho Santa Margarita workers will be offered jobs in Carlsbad.

The move will dismantle one of the three Hughes plants in Orange County. The company also operates Hughes Ground Systems Group, which employs 7,500 people in Fullerton and two semiconductor divisions employing 1,250 in Newport Beach.

Employees interviewed as they left the company parking lot in a driving rainstorm Wednesday afternoon said they were shocked by the announcement. Managers told employees about the planned move at a plantwide meeting Wednesday morning.

“This was a complete surprise. . . . People started crying, it hit us hard,” said Gidget DeMun, 43, of Huntington Beach. “Everyone was in shock. . . . We don’t know who’s going, who’s coming, if anyone is going to be here. What am I going to do? Pray.”

Another worker, Mary Ambriz, said she felt scared and depressed. “My husband is disabled, and I don’t know if we can keep our house. Moving to Carlsbad is pretty much out of the question, and I don’t know if I’m going to be offered a job anyhow.”

The Hughes announcement is the latest in a series of local defense job cuts. Loral Aeronutronic, a unit of New York-based Loral Corp., said last month that it will lay off up to 600 employees in Newport Beach. A week later, Rockwell International announced plans to cut as many as 200 jobs in Anaheim after President Bush decided to cancel the Midgetman nuclear missile program.

“Obviously, we’re concerned when there is any loss of high-tech employment in the county,” said Orange County Supervisor Thomas F. Riley. “I think this is happening throughout the state.”

Employees said they were surprised by the move because Hughes moved its microelectronics unit from Irvine to Rancho Santa Margarita only five years ago. The company moved what was then a work force of 950 people into a new, $30-million plant in the business park. But the division has been shrinking since then, due to layoffs and attrition.

“This is really bad, some of us have been here for a lot of years,” said Linda Kirker, 50, of Seal Beach, a 19-year Hughes employee. “What this tells me is that someone screwed up. We never should have moved here in the first place. . . . If we hadn’t we would probably still have our jobs. I have five more years before I retire. If they offer me a job, I’ll go.”

The decision caught Santa Margarita Co. officials by surprise.

“I’m sure that the consolidation was a very difficult business decision for Hughes to make,” company spokeswoman Diane Gaynor said in a statement. “We really don’t know if there will be an impact. Certainly our (sales and leasing) efforts will proceed as usual.”

“Any time jobs leave the area, it’s a very serious matter,” said Barbara Vaughan, executive director of the Rancho Santa Margarita Chamber of Commerce. “It is an enormous disruption for the community as well as for the employees whose lives are directly affected. Most people shop and go to restaurants where they work. No doubt this will have an impact on retail businesses.”

The Santa Margarita Co. development began in the early 1980s in a largely undeveloped section of southern Orange County, east of Mission Viejo. The company’s sales pitch included bringing jobs into the community so that people wouldn’t have to commute long distances to work on traffic-clogged freeways.

Some 3,700 people work at more than 140 companies in the business park. About 50% of the workers either live in Rancho Santa Margarita or commute less than 10 miles to their jobs.

Ron Greek, president of Saddleback Area Coordinating Council, predicted that the community will survive the loss of Hughes. “It will have very little affect on the community,” said Greek, who heads a group of homeowners’ associations that includes Rancho Santa Margarita.

Greek said only about 5% of the Hughes employees live in Rancho Santa Margarita. “Many of the employees lived in Irvine when Hughes was there and never moved after the relocation.”

Stan Mullin, a real estate consultant at Grubb & Ellis in Irvine, said Hughes’ decision to move “tells me more about how the economy is hurting everything (and is) not a reflection on the business park.”

Richard Collins, director of finance for Bowers Perez Associates--the Los Angeles developer that constructed and owns the Hughes building--expressed shock at the aerospace company’s announcement. “We’re stunned,” he said. “We only found out moments ago. I don’t know how this is going to work out. It’s certainly not good news.”

Computer maker Unisys Corp. is the second biggest industrial tenant at the Santa Margarita Center. Unisys employs several hundred people and has been expanding despite an overall corporate consolidation.

The Hughes Microelectronic Systems Division employs about 475 people who make military communications equipment, security devices and stereo equipment. Another 25 to 30 people work in two smaller business groups.

The division will merge by midyear with Hughes Industrial Products, a Carlsbad operation that employs about 475 people who make welding and soldering tools, Herrman said. Westchester-based Hughes Aircraft Co. is a subsidiary of General Motors Corp.

Employees will learn by mid-March how their jobs will be affected, Herman said. They said managers have told them that layoff notices will be handed out March 6 and that those terminated will get 60 days’ severance pay.

The loss of jobs will take a toll on the Orange County economy, said Esmael Adibi, a Chapman University economist.

“This is in line with our previous statements that we expect to lose about 2,000 jobs in technology in Orange County in 1992,” he said. “The defense-oriented technology companies will be adjusting to deal with lower defense budgets, and this is a process that will not be over soon.”

Hughes hasn’t decided whether it will pay relocation expenses for employees offered jobs in Carlsbad, Herrman said. He also could not say what would happen to a smaller group of workers at other divisions in Rancho Santa Margarita.