Hughes Poised to Reveal Plans for Convair Deal : Jobs: Industry observers speculate that the Canoga Park firm will probably consolidate operations at its giant Tucson facility, which is now one-third empty.
Hughes Aircraft is expected to make an announcement as early as Monday related to its negotiations to acquire General Dynamics’ Convair missile business, industry sources said Friday, an announcement that could affect thousands of Convair employees in San Diego.
The firm had told executives at its missile systems group in Canoga Park that an announcement would be made Friday, but the announcement was delayed repeatedly throughout the day, the sources said.
Hughes, a subsidiary of General Motors, said Thursday that it is in “final negotiations” to acquire the General Dynamics missile business in Pomona and San Diego. That announcement followed General Dynamics’ disclosure on Wednesday that it planned to sell its Convair and Electronics divisions in San Diego as soon as deals could be arranged.
A sale of the Convair missile business to Hughes would affect about 4,500 Convair employees in San Diego whose main work is assembling Tomahawk cruise missiles. Another 3,500 Convair workers in San Diego assemble fuselages for McDonnell Douglas’ MD-11 commercial jetliner. General Dynamics’ other San Diego division to be sold, Electronics, employs 2,400.
It is expected that Hughes would consolidate facilities if a merger occurs. The two firms operate more than a dozen plants, spread out in California, Arizona, Alabama, Arkansas and other Southern states, most with excess capacity that will increase as some of their missile programs end. But industry experts say the decisions to consolidate facilities would take months after any merger is completed.
Nevertheless, observers speculated that Hughes’ giant Tucson facility, measuring 2.2-million square feet, would be a logical site for consolidation because about 750,000 square feet, or nearly one third of the facility, is now empty. Neil Shpritz, economic research director at the Greater Tucson Economic Council, said nearly half will be vacant by the end of 1992.
Hughes’ interest in Convair’s missile operation came as a major surprise Friday to aerospace analysts and industry officials, given Hughes’ stated goal to become less dependent on the defense business and given the financial condition of its parent, General Motors.
Hughes spokesmen declined to comment on any aspect of the General Dynamics deal or on rumors circulating within the company that it will close its Canoga Park missile systems headquarters and relocate to Tucson.
Various Tucson officials said Friday that they have no solid information on reports that, if a Convair deal were consummated, Hughes would move the newly acquired operations to the mammoth Hughes plant on the city’s outskirts.
“I have heard the rumor that Hughes was interested in either buying General Dynamics Convair or moving it here, but that’s as much as I know about it,” said Tucson Mayor George Miller.
Because of defense budget cutbacks, General Dynamics’ San Diego operations have seen a steady decline in employment over the past two years, dropping to the current payroll of 13,500 employees from 17,500 in 1989. But the city has not yet suffered the large scale loss of jobs that would result if most or all of Convair’s operations were to be relocated in a merger.
Jobs at the Hughes Aircraft plant in Tucson have also declined as the government has cut back purchases of the four missiles made there. Current Hughes employment of 4,700 in Tucson is expected to drop to as low as 3,600 by year’s end, down from a peak of 9,000 in 1986.
Hughes has been trying to diversify its Tucson work force into non-defense lines of businesses, including optical reader systems for the Postal Service and microwave equipment. But those efforts have met with mixed results, sources said.
Both firms operate production plants owned by the military services. A significant portion of General Dynamics’ Pomona facility is owned by the Navy, and a large portion of Hughes’ Tucson missile plant is owned by the Air Force.
The Air Force has been seeking to sell to Hughes its part of the Tucson plant, according to the current edition of the firm’s employee newspaper.
“We are saying that Hughes doesn’t want to buy the government property because the company already has 5 million square feet more space than it needs,” the newspaper quoted Rich Siegel, manager of the missile operations division.
Siegel said that, until Hughes and the Air Force settle the issue of ownership, it will be difficult to consolidate the Tucson plant. The firm would like to vacate its own portion of the plant and move into the Air Force portion without buying it. Siegel said the consolidation must be done by 1994 for the firm to remain competitive.
Meanwhile in San Diego, Joe Alioto, a candidate for the U.S. Senate, criticized a possible sale of the two General Dynamics divisions as a violation of federal antitrust laws. He spoke Friday at a political rally, billed as a “pink slip protest,” outside General Dynamics’ Convair Division main gate on Pacific Coast Highway.
The gathering attracted fewer than 100 Convair employees, who lingered during the Convair shift change as the politician tried to make himself heard over traffic.
Falls Church, Va.-based General Dynamics issued a press release, saying it was “premature to speculate about any impact on employment and irresponsible to use General Dynamics employees as a platform for political gain.”
Times Staff writer Greg Johnson in San Diego contributed to this story.
