Aerospace Woe Won't Spare O.C. : Cutbacks: High-tech companies have already pared payrolls by 6,000 since '87, and more layoffs are to come.


Sam Higgins hadn't yet read a new comprehensive report that predicts devastating job losses in the Southern California economy as a result of cuts in the aerospace business. But he was hardly surprised by news reports Tuesday detailing the study's findings.

Higgins' company, Air Industries Corp. in Garden Grove, expects to lay off up to 50% of its 550 employees during the next year because of a slowdown in military and commercial aircraft orders.

"I only know what I can see for my own company, and I don't have a lot of optimism," said Higgins, president of the aircraft fastener manufacturer. Air Industries has already eliminated overtime pay and cut many workers from five-day to four-day workweeks.

The Aerospace Task Force Report, published Tuesday, predicts that Los Angeles County could lose 210,000 to 420,000 jobs in all sectors of the economy by 1995, largely because of its dependence on the sagging defense industry. A separate estimate in the report predicts lower but still significant losses of 184,000 jobs by 2001.

"The effects will be long lasting," the report said. "County communities will be affected by relocation, tax revenue loss and economic ripple effects. More tragically, the lives of hundreds of thousands of persons within Los Angeles County will be painfully disrupted."

Orange County was not included in the yearlong study, commissioned by Los Angeles County government. But economists and local aerospace executives say Orange County will probably share in the region's woes. High-technology employment in the county has shrunk from 96,000 in 1987 to 83,000 in 1991. Another 2,000 jobs are expected to be cut this year.

"Orange County has begun to see some fallout in terms of layoffs, but it's only the tip of the iceberg," said Mark Matthews, administrative analyst for the Orange County Community Services Agency, which retrains laid-off workers. "There's no question we will need more resources for training people."

Air Industries' Higgins wasn't the only one to take the study's gloomy findings in stride.

"It's something we've known has been coming for some time," said Ron Cedillos, a Huntington Beach resident and former owner of an aerospace testing company in Long Beach. "I think it's news to other people."

One of the recommendations of the report was the creation of a technology research center that would help small and medium-size defense-related companies acquire technology, financing and other assistance to develop commercial markets.

Joseph Blizzard, vice president, marketing, for Arrowhead Products in Los Alamitos, which designs and engineers aircraft parts, said his company is already making the difficult transition from defense to commercial work.

About five years ago, 70% of the company's sales were tied to the defense industry. But Arrowhead Products has been striving to increase its non-defense contracts in recent years and now gets 80% of its business from commercial customers like Boeing Co., for whom it designs engine ducts.

The company employs 525 people, and Blizzard said he expects employment to be stable over the next year. "We have foreseen this kind of trend for some time," he said. "We don't see the drastic cuts and gloom that others do."

Some defense contractors have found that commercial aerospace hasn't necessarily been a savior because the recession is hurting that business.

"I think companies have been aware of the defense budget trend, but they did not anticipate the recession lasting this long and affecting their commercial business," said Matthews.

Hughes Aircraft Co. in Rancho Santa Margarita told employees this week that between 125 and 150 of them won't be offered jobs after the company moves its 475-employee industrial products group to Carlsbad next July, said Bill Herrman, a company spokesman. Hughes announced the cost-reduction move earlier this month.

At Aluminum Forge Co., which makes wings and fuselages for aircraft in Santa Ana, the story is similar. Business is "terrible," said James McGovern, company president. The company has laid off 45% of its 225 employees in the past year, and about 50 more jobs will be slashed in the next two months, he said.

"There is not a lot anyone can do to control the market when the airlines decide not to order more planes," McGovern said. "But they've got to cut us some relief on workers' compensation and health care costs."

Barry Rodgers, chairman of BFM Aerospace in Santa Ana, said he wasn't sure if the report exaggerated the impact of aerospace layoffs.

"I'm not sure I believe the 420,000 jobs lost figure, but I believe the number will be significant, and, together with the recession, it will mean Orange County will be slow to recover," he said.

But the outlook for BFM's companies, which make bearings, valves and fuel tanks for military and commercial aircraft and ships, isn't good.

Overall, BFM's four subsidiaries have laid off 200 of their 900 employees in the last several months. More cuts are expected, Rodgers said. He thinks worker retraining and incentives for stimulating high-tech growth--actions recommended by the task force--will be key to offsetting the effect of the industry layoffs.

But he scoffed at the report's recommendation for closer cooperation between state and local government and industry. "I think it's too little too late. We've known about these problems for four years, but nobody listened."

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