Rohr Reports Loss, Plans to Shut Washington Plant

Rohr Inc. has announced a $25.2-million loss for its third quarter and plans to close an Auburn, Wash., plant and lay off 170 employees.

The layoffs are the latest in a yearlong series of cutbacks at Rohr that, by the end of July, will leave the the Chula Vista aerospace manufacturer with 2,000 fewer workers than it had in July, 1991, an 18% drop.

The quarter’s red ink was caused by the company’s decision to set aside $50 million in special-loss provisions. About half of the reserves are to account for anticipated losses resulting from the Air Force’s termination of a contract to buy Rohr replacement pylons for the Air Force’s C-5 Galaxy transport aircraft.

As previously announced, Rohr is locked in a contractual dispute with the Air Force that may take months to resolve. The Air Force claims that Rohr failed to deliver the parts, which are used to attach engines to the airframe, and has demanded a $27-million refund.

Rohr alleges the Air Force unfairly changed specifications in mid-contract, making the contract unprofitable. Rohr stopped deliveries.

The company also decided to set aside loss provisions because it expects an unfavorable settlement with the U.S. attorney’s office in Los Angeles over the government’s allegations of procedural irregularities at Rohr’s Riverside plant.

Reserves were also required to cover the cost of closing the Washington plant, one of 10 Rohr facilities. The facility had been doing work for Boeing, but Boeing has decided to no longer contract the work out.

The loss came on third-quarter revenue of $298.8 million and compares with a $9-million profit on revenue of $358.2 million for the same quarter last year. Rohr attributed the decline in revenues during the quarter to unfavorable product delivery scheduling and to the slowdown in the commercial aviation jet manufacturing business.

“Today’s industry conditions are causing Rohr to cut its cost structure significantly,” said a statement from Rohr.

After cutting employees by 1,300 since last June, Rohr announced earlier this month that it would terminate an additional 750 white collar workers between now and July 31, including 500 workers at its Chula Vista headquarters plant. Rohr now employs 9,850 workers.

Rohr shares closed at $13.625 on Thursday, down $.375 in New York Stock Exchange trading.