Aerospace Layoffs Compound Housing Market Problems
Aerospace industry layoffs couldn’t be coming at a worse time for many San Fernando Valley and Ventura County home sellers.
The San Fernando Valley Board of Realtors reports about 12,450 homes and condos currently offered for sale. There were 719 new listings in the first week of May alone, while sales for the same period were 314.
The layoff or relocation of several thousand aerospace employees locally is likely to add even more homes and more distressed sellers to an already beleaguered market. Los Angeles County lost about 26,000 aerospace jobs last year, and the forecast is for another 30,000 layoffs this year and about 25,000 next year. About one-third of these job losses affect residents of the San Fernando Valley, according to the Economic Development Corp. of Los Angeles County.
It’s no wonder that 42% of San Fernando Valley residents polled recently by the Los Angeles Times reported that someone in their household was fired, laid off or lost income within the past year. A majority of those in households where income was derived from aerospace industries said they had suffered economic losses. All this can’t help but be harmful to the local real estate market.
“It’s not a pretty picture,” said Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County. “A lot of the layoffs are coming out of the Valley,” he said. “What you’re losing are a lot of high-wage earners.” About 80% of those being laid off have been making $15 to $18 an hour, Kyser said. There aren’t many other well-paying jobs to fill the vacuum created by these type of job losses.
The average age of aerospace workers being laid off is 38, Kyser said. These are precisely the type of homeowners who might otherwise be fueling the so-called move-up market.
“You’re taking a lot of people out of the move-up market and replacing them with distressed sellers,” Kyser said. “As a result, I think there will continue to be price declines during the next year--especially for anything over $300,000.”
What’s in store for local aerospace workers is pretty grim:
Hughes Aircraft Co.’s missile design plant on an 85-acre site in Canoga Park will close and go on sale next year. About 1,900 local jobs will be lost, although a sizable number of Canoga Park workers will relocate to Tucson, Ariz., between now and the end of 1994.
Rockwell International’s Rocketdyne division is facing the prospect of job losses that would accompany budget cuts in the space station program. Employment at this rocket engine division is currently about 6,000, down from a 1964 high of 17,750. Budget cuts proposed by the Clinton Administration may also eliminate about 145 jobs next year and slow environmental cleanup work at Rockwell International’s Santa Susana Field Laboratory just outside the Simi Valley city limits.
About 700 jobs will be eliminated at Litton Industries’ navigation systems unit in Woodland Hills by 1995.
Lockheed Corp. has maintained its Calabasas headquarters, but has moved thousands of aerospace production jobs from Burbank to Marietta, Ga. Lockheed will be out of its former flagship plant in Burbank by next year. In 1943, Lockheed employed 90,000 workers locally.
Northrop Corp. currently employs a high of 4,000 at its Palmdale plant. This B-2 bomber-building plant, however, may be in jeopardy. The B-2 program will end in 1997 and prospects for the plant after that are uncertain.
Abex Aerospace in Oxnard, Datron Systems Inc. in Simi Valley and ITT Corp.’s Gilfillan radar-equipment unit in Van Nuys have together eliminated hundreds of jobs since 1990, either through attrition or layoffs.
And finally, GM last summer closed its automotive plant in Van Nuys, the last major car assembly plant in Southern California. The move left 2,600 workers without jobs.
The Jon Douglas Co. is one of several real estate brokerage companies retained by Hughes to help some of its employees relocate from Canoga Park to Tucson, reported Harriet Clune, manager at Jon Douglas in Woodland Hills. Her company has already had two Hughes relocation training sessions for Jon Douglas agents; a third one is planned soon.
Large numbers of Hughes employees are concentrated in Simi, Westlake Village and Agoura Hills, Clune said. “People are very stressed,” she added, especially those who bought their home two or three years ago and have watched their equity disappear.
“People are concerned about their future,” said Alice McCain, the new president of the San Fernando Valley Board of Realtors and a sales agent at R. R. Gable Inc. in Northridge.
“We’re not apt to see many move-up buyers,” she conceded. “One job loss can have a big impact,” McCain said. “The gardener and the pool cleaner, for example, lose clients because many aerospace workers are mowing their own lawns and cleaning their own pools.
“These business owners are then less likely to buy a house too,” she said. “It has a negative trickle-down effect.”
