McDonnell Will Shut Down Its Torrance Plant
McDonnell Douglas Corp. announced Friday that it will close its Torrance aircraft parts manufacturing plant next year and eliminate 2,000 jobs, a serious blow to the Southern California aerospace industry and a grim omen for economic rebuilding efforts following the Los Angeles riots.
The giant Torrance plant, among the largest machining factories on the West Coast, employed 5,000 people in 1988, but its work force has declined steadily since then as new aircraft orders slipped and McDonnell shipped jobs out of state. Many workers said Friday that they had been resigned to an eventual closure.
The plant closure reflects both the internal troubles of McDonnell Douglas, which has been losing market share for years, and the current downturn in the airline business, which is beset by a slow economy and brutal competition. As the nation’s largest defense contractor, the company also must cope with a long-term decline in U.S. military spending in the aftermath of the Cold War.
The Torrance closure is expected to have broad ramifications, particularly hurting Southern California subcontractors who provide special industrial services to the operation, including parts-testing, heat treating and plating and many others.
As major aerospace operations defect from Southern California, the region risks losing the specialized critical mass that makes it the nation’s largest industrial hub for aircraft parts, missiles, spacecraft and electronic systems.
“When you see a McDonnell Douglas abandoning a facility like this, it is another piece of our anxiety coming true,” said Daniel Flaming, president of the Economic Roundtable, a nonprofit research group in Los Angeles that recently led a study of the aerospace exodus.
Robert Hood, president of Douglas Aircraft of Long Beach, a unit of McDonnell Douglas, said the 2.3 million-square-foot Torrance plant was “so underutilized that we just cannot continue to operate here.”
Hood also said the facility’s age, high maintenance costs and obsolete equipment, as well as local environmental regulations, figured in the decision.
Only last year, Hood was among a half dozen aerospace chiefs who met with Gov. Pete Wilson to vent concerns about the growing burdens facing businesses in California. McDonnell officials said some months later that they were disappointed with what was done to address their problem.
McDonnell officials declined Friday to discuss the Torrance plant closure. The plant is actually just inside the borders of Los Angeles.
Los Angeles Deputy Mayor Mark Fabiani said city officials met with McDonnell in recent weeks to explore whether the city could solve any of the firm’s problems, but he said it was clear that McDonnell’s complaints involved regional government rather than municipal issues.
Fabiani termed McDonnell’s decision “a step backward” in the Los Angeles rebuilding effort and noted that McDonnell’s timing “leaves a lot to be desired.”
In a statement, Hood expressed “extreme regret.” Nevertheless, McDonnell has been among the biggest exporters of work from Southern California, citing the lower cost and lighter regulatory burden of doing business elsewhere.
The firm transferred the entire Navy T-45 trainer jet program from Long Beach to St. Louis two years ago. It also transferred bomb rack and ejection seat businesses from Douglas.
Portions of the Air Force C-17 cargo jet program were transferred from Long Beach to St. Louis, including production of the massive cargo door. The firm moved the assembly of fuselage sections for the MD-80 jetliner to Salt Lake City. And it opened a subassembly plant in Macon, Ga., and expanded another such plant in Melbourne, Ark.
But the biggest blow came last year when the firm announced that it would build its next major commercial jet, the MD-12, at a new plant in one of nine cities outside of California, employing from 5,000 to 12,000 workers.
McDonnell has laid off about 15,000 workers in Long Beach, slashing total employment there to 30,500. Those jobs were lost because of transfers and falling production owing to weak commercial sales.
In the past five business quarters, McDonnell has had a net loss of 35 aircraft orders, resulting from aircraft cancellations and weak new sales.
McDonnell stock has become a “casino play,” said Paine Webber analyst Jack Modzelewski, referring to its wild gyrations. It soared from below $30 a share last year to a peak of $80.50 earlier this year. Since then, it has plummeted to $40.75, including a loss of $2.75 Friday when investors reacted to the news about Torrance.
“We were all hoping that the economy would turn around and people would come back to work,” said Mike Smith, president of the International Assn. of Machinists District Lodge 720, which represents 1,400 workers at the Torrance plant. “We have been through good times and bad times, but now we have hit rock bottom.”
Smith said he had been continually assured by McDonnell officials that there was no plan to close Torrance, despite rumors that have circulated for years. When McDonnell designated the Long Beach operation as a “final assembly” site two years ago, it appeared to seal the fate of Torrance.
Smith said he had hoped that the company would transfer at least some of the Torrance work to its plants in Long Beach or Huntington Beach.
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