Louis H. Kurkjian runs part of the Hughes Aircraft Co. plant in Fullerton formerly known as the Ground Systems Group. The sprawling complex once employed 15,000 people, but defense cuts have taken a toll. It is still Fullerton's largest employer, with more than 7,100 people, and it generates annual revenue of about $1 billion. But its future depends on President Clinton's defense budget and on where executives like Kurkjian steer the company. He was recently interviewed by Times staff writer Dean Takahashi.
What has happened to the former Ground Systems Group in Fullerton?
In more recent times, the company has recognized that there is a different, more competitive business environment. Michael Armstrong, our new chief executive (of parent company Hughes Aircraft Co.), has established the corporation into six sectors so that we can more effectively match our skills with the marketplace.
He is grouping like kinds of businesses together. It has forced us to combine things and do things better.
One sector is aerospace and defense. In Fullerton, the defense and aerospace programs that we have are strategic in nature, including the Adcap torpedo and some radar programs, as well as making display consoles for military equipment.
Another unit here is the systems sector. Much of our business is air traffic control, air defense systems, command and control, and diversification into non-defense areas, such as airport systems integration and intelligent vehicle and highway systems, or smart highways and cars.
We are doing all of these things in Fullerton.
What has happened to the work force?
As you know, we have gone down from about 15,000 in the mid-'80s to about 7,100 now. We eliminated some jobs when we did the realignment last year. We do whatever has to be done to become efficient.
Has the management restructuring led to confusion among your people and created fears about job security?
When you have employment trends going like this (points downward), there are severe morale issues, not just for us but for the whole industry. In this kind of environment, management has to take extraordinary steps to communicate with its employees.
Has the restructuring led to some turf battles among the different subsidiaries?
I think our company has been pretty good about these things. If we see a business in the customer arena and one unit can address that marketplace as well as another, we combine things so they work better. Everything is open for review. The kinds of things that are done here in Fullerton are fairly stable. We did make some decisions some years ago to move some production elsewhere because of the costs of labor and other factors. We established our torpedo manufacturing in Mississippi. That is one reason that we were able to win the sole source for that contract.
What programs will be affected the most?
It's highly dependent on the budget of President Clinton and some of the actions that he will take. He has the ability to make some near-term decisions that could be positive or that could put some pressure on us. One of the things that will mitigate that is our international business, such as our contract with Saudi Arabia to build their Peace Shield air defense system.
How many people are working on that program?
You could safely say that more than 500 people in Fullerton. Including local subcontractors, you could comfortably say there are more than 750 people working on it. There is still some more growth ahead, maybe another 100 people.
Do you still have goals for targeting the mix of defense and commercial business?
There were some early targeted goals. The current management thinking is we should look for businesses that can grow and are profitable and can match the capabilities of the company. To set artificial numbers is not really in our best interests.
Having said that, we are aggressively working on diversification. When we first reorganized, the corporation looked at diversification opportunities. I think we were very conscious of our technology capabilities. But in some sense we could have done a better job of market analysis.
With the end of the Cold War, the Persian Gulf War, the situation in Bosnia and the bombing of the World Trade Center, what is the threat that your company is preparing for?
Our country is recognizing that peace has not broken out. There are many conflicts today in the world, but we hope the nature of these are more localized. So we need a military force that is more flexible, more mobile and I think some of the things we are doing here in Fullerton match that kind of need nicely, like our tactical radar work. I think the Pacific Rim has a lot of tension between countries and so air defense is one area of growth.
You've got about 150 acres of land that could be put up for sale. What are you doing on that?
We had a general meeting at Sunny Hills High School. We shared with everyone that some of the north part of our property could be surplus to our needs. The corporation has not made any decision about that. But right now, with the real estate market, it wouldn't be a good time (to sell).
The Cal State Fullerton report on the defense industry in Orange County projected that 11,000 jobs might disappear in the next four years. We've already lost 27,000 since 1987. How do we address this trend?
We are a microcosm of our country and we are going to have to react. My perception is that a lot of that adjustment has taken place. It could be more. The actions you have to take are continuous improvement and cost reductions. We have to get what market share we can and diversify effectively.
On aerospace industry consolidation. . .
"We're amenable to acquisitions. Years ago, the company was very conservative. I think now it's really going to be based on opportunity . . . where there is a strategic advantage, such as in joint ventures."
On managing in tough times. . .
"It's the manager's obligation to create an environment in which (workers) can be most productive and for us to have a vision of where we want to go in the marketplace."
On defense conversion. . .
"Choose programs carefully when looking for investments that will have a national and industry payoff. You can't just throw money into the system and tell people to convert."
On what Clinton could do. . .
"I think that (he can improve) interaction between government and industry and take advantage of the capabilities in the industrial sector."