California Amplifier Thrives Amid Defense Cutbacks : Camarillo: The company planned early for economic conversion. But many local firms have shut down or hesitate to enter the civilian market.
Several years ago, executives at California Amplifier Inc., a Camarillo firm that makes components for satellite dishes, foresaw an economic shakedown as the United States began cutting back on military spending in the face of a diminished Soviet threat.
Until 1990, the firm had split its operations between defense work--supplying amplifier products for such things as radar detection systems--and commercial manufacturing of amplifiers for home satellite television dishes.
But then the company shifted entirely into the faster-growing non-defense field, which at one time accounted for less than half its business.
California Amplifier has been going like gangbusters ever since. Sales have jumped more than 300% in the past three years. Employment has grown from 160 to 400--including many former aerospace workers from other companies--even as defense contractors in Ventura County have suffered through retrenchments and plant closings.
“The indications were out there, but there were a lot of people and a lot of companies who were ignoring that,” said a spokesman for Chairman Barry W. Hall. “I’m sure there are companies now whose leadership looks rather shortsighted.”
California Amplifier is indeed an exception.
Raytheon Co. in Oxnard, Northrop Corp. in Newbury Park and, most recently, Abex Aerospace in Oxnard have closed facilities in the last few years, laying off hundreds of highly trained workers. And many other firms--Unisys Corp. and Power-One Inc. in Camarillo and Tandon Corp. in Moorpark--have significantly scaled down their operations.
And things may get worse before they get better. The Clinton Administration is seeking steeper cuts in defense, $113 billion more than former President Bush proposed over the next five years.
To cushion the blow, particularly in places such as hard-hit Southern California, Clinton is pushing new programs to help with defense conversion--the modern equivalent of beating swords into plowshares.
Clinton recently announced that $1.4 billion appropriated but not spent during the Bush Administration would be released to encourage the development of technologies that can be used for both defense and civilian purposes and to retrain defense-industry workers.
The President has requested another $19.5 billion in his economic plan through fiscal 1997 to help defense firms develop new technologies and manufacture products that can be sold commercially.
The program’s details remain vague--it was hurriedly unveiled earlier this month in an attempt to soften the announcement of new base closings--but it clearly represents a philosophical shift at the White House.
The funds are not targeted on a geographic basis, but the Administration is aware of the state’s plight. “Communities most dependent on defense are the ones most in need of conversion,” said Bruce Reed, Clinton’s deputy assistant domestic policy adviser. “And if we don’t make the transition to a domestic economy in California, the whole country will suffer from it.”
Some of those who have been grappling with the fallout from defense cuts in Ventura County say it’s not too early to plan for such a transition. Others, particularly some defense contractors, are skeptical that this process offers realistic relief.
“What’s the alternative?” asked Philip Bohan, manager of the federally funded Job Training Policy Council of Ventura County. “We’ll probably see more layoffs and plant closures before this is successful. But the employers are going to have to make this adjustment and the workers are going to have to make this adjustment.”
Ventura County has seen a net decline in high-technology manufacturing jobs--which are primarily defense-related--from 12,200 to 10,000 between 1989 and 1992, according to figures compiled by the state Employment Development Department. This is a drop of 18%.
This category includes the aerospace and electronic-computing-equipment industries. Most of the losses have been in aerospace, which has declined from 4,300 to 2,400. These workers make aircraft, missiles and spacecraft as well as search and navigation systems and equipment.
Experts project that for every job lost by a prime contractor, nearly three subcontracting jobs will disappear. And each layoff creates untold hardship and heartache.
Bohan’s program has counseled and retrained about 200 to 250 workers annually who have lost their jobs as a result of a plant closure or a mass layoff. Its clients have included machinists, aerospace engineers and others who worked for defense contractors and subcontractors.
Dee Johnson, who coordinates the dislocated workers program for the state employment office in Ventura County, agreed that firms should begin to adjust to a new peacetime reality.
“We need to be doing a better job of supplying re-employment and retraining opportunities in viable occupations where there’s going to be demand for workers,” said Johnson, whose agency works closely with Bohan’s program. “Here are all these intelligent people with all this brainpower and we’ve got to put them someplace else.”
Ventura County Supervisor John Flynn said that, given the county’s air-quality problems, a natural focus for conversion efforts might be building electric cars or light-rail systems. Such an effort, spearheaded by public officials and private companies, is well under way in Los Angeles County.
The impact on Ventura County of the defense build-down has been milder than its effect on Los Angeles County, however. A major reason is Ventura County’s diversified economy, which has numerous service companies and farm workers among its 383,600 non-military work force.
In addition, some areas of the county have been able to compensate for departing defense jobs through the growth of other industries. In the Conejo Valley, firms have either expanded or relocated into the county, somewhat offsetting Northrop’s 1990 shutdown, said Stephen Rubenstein, president of the Conejo Valley Chamber of Commerce.
Amgen, a fast-growing biotechnology company based in Newbury Park, has expanded from 80 employees to about 2,000, he said. And Dole Food Co. recently moved a division that will initially employ 420 from San Francisco to Westlake.
Clinton’s approach to defense issues has its critics. Rep. Elton Gallegly (R-Simi Valley), whose 23rd District takes in Carpinteria and all of Ventura County except most of Thousand Oaks, said he opposes such deep reductions in military spending, especially in light of the current tensions in Russia.
“President Clinton would be very wise to consider where we are in the world and how we got there and how we best protect ourselves from not taking too big a step backward,” said Gallegly, a longtime defense hawk.
He has introduced a bill to provide tax credits to employers who establish a program for defense workers who lose their jobs in cutbacks or former military personnel. This would leave it to the private sector to provide employment for displaced workers, he said.
And not everyone thinks that conversion represents a realistic alternative for defense contractors. Even those who have pursued it say that such a transition may prove a challenging, costly and slow process.
The hurdles are formidable. Commercial work requires different skills and contacts than defense work. Military products are designed to government specifications, take several years to develop and are made in relatively small quantities. Commercial markets, in contrast, involve many customers, fast turnarounds and larger orders.
Datron Systems Inc. plans to shut down its Camarillo plant--which has employed as many as 230 people--in response to reduced defense contracts. The firm’s defense division, which will be consolidated at its Simi Valley facility, makes telemetry tracking and command systems, radar systems, satellite communication systems, airborne antennae and various other components.
The firm’s sales were $73 million for the year ending March 31, 1992, and are expected to drop below $60 million for the current fiscal year, said Tom Baker, chief financial officer. At its peak, defense work accounted for 70% of Datron’s business. That’s down to under 50%. Defense employment, which was 400, will be cut to about 210.
On the non-defense side, Datron makes high- and very-high-frequency radio products and non-military telemetry systems used to gather information for satellites. It sells these systems to government agencies for use in border patrols, drug interdictions and other functions. Baker said Datron is trying to expand its sales in these markets rather than convert its defense operation.
“We don’t believe it’s possible,” he said. “You build a whole company and a philosophy and a culture that’s geared to service a customer who doesn’t really care how much it costs him and it’s virtually impossible to change that culture to serve a customer who is very much price-driven.”
But some companies have found a bright future in expanding their non-defense operations.
In 1990, California Amplifier did $4 million in defense and $6.8 million in commercial business. At that time, it effectively left the defense business by signing a deal with Amplica Inc. to have the Newbury Park firm act as California Amplifier’s subcontractor on backlogged military orders.
Simultaneously, Cal Amp decided to broaden its home satellite market from the very high end to the mainstream. The larger, top-of-the-line civilian amplifiers were closer to the defense products, so the new approach required a change in orientation.
“Defense businesses have created technologies that have great commercial applications, but the mind-set is to make something the consumer might not want or need,” said Michael Ferron, California Amplifier’s chief financial officer. “You have to go from a high-end application to make a low-cost, high-volume product.”
The company redesigned its defense facilities and brought in new equipment for commercial production. Initially, 60 employees working on defense projects moved over to Amplica. But that temporary loss has been more than offset by new hires in the growing civilian operation.
“A tremendous amount have experience in defense,” a company spokesman said. “Typically, with the defense background, they were well trained and well schooled in the manufacturing process.”
