McDonnell Douglas Is Asked to Keep Jobs in State : Aerospace: Consortium of 50 Southern California machine shops says concrete results have yet to be seen.

A consortium of 50 aerospace machine shops in Southern California has asked McDonnell Douglas to restrict the amount of parts manufacturing work being shipped out of state amid an increasingly bleak outlook for the local industry.

After a series of recent meetings with McDonnell representatives, however, the group had not accomplished anything concrete and its future impact “remains to be seen,” according to Doy Henley, a leader of the group and owner of Aeromil in Santa Ana.

There is intense concern in the enormous California machining industry about McDonnell’s hiring of out-of-state contractors and about the financial pressure the company is putting on small shops, a cornerstone of the aerospace industry.

John Albin, owner of Prime Engineering in South El Monte, had 60 metal-cutting machines and 40 employees making parts for McDonnell jetliners. But McDonnell transferred the work out of state this year and refused to allow him to bid on the work, he said.

Albin said he shut down the plant and auctioned his machines. Now, he claims, McDonnell is trying to stiff him on several hundred thousand dollars’ worth of parts. While Prime Engineering is an extreme case, almost all McDonnell suppliers are feeling the pinch.

In April, Douglas Aircraft in Long Beach sent letters to suppliers asking them to accept an additional 30-day delay on routine payments, beyond the normal 30- to 60-day waiting period after delivery of goods.

“This additional delay is required to align our expenditures with aircraft deliveries,” the letter says. “With your cooperation, understanding and support, we can work together during the current downturn. During this next round of downsizing, we both will experience economic pain as we go through a most difficult period for both our companies.”

The letter was widely interpreted by vendors as an outright demand, which placed a heavy burden on businesses lucky to earn a 5% profit on sales. “That was really gross,” said Ed Cutler of Aamec, a South El Monte machine shop, about the payment delay.

Don Hanson, a Douglas spokesman, said that on balance the company is not pulling work out of the Southland, although it is transferring some work out and awarding some new contracts locally.

As a result of the phasing out of its Torrance machine shop announced last year, Douglas is locally subcontracting the production of about 6,000 to 8,000 different parts and plans to place another 6,000 parts in the future, Hanson said.

Of the work contracted out from the Torrance plant, about 30% has gone to out-of-state suppliers, 30% to other McDonnell units located outside California, and 5% has gone overseas, the company said.

Just 10% of the work went to Los Angeles suppliers, 20% to Douglas’ Long Beach plant and 2% to its Huntington Beach plant, the company said. McDonnell said it plans to keep 60% of future work in the area.

Local suppliers were particularly irked earlier this year when Douglas declined to allow local companies to bid on a single contract for 2,400 parts. The word among Los Angeles machine shops is that the work will go to Utah.

Hanson said the company did not find a local machining firm capable of handling such a large package of parts--despite the fact that Los Angeles is widely regarded as the largest center of industrial machining in the United States.

McDonnell told the local machining coalition that it should form a consortium to bid on the work, but “nothing was heard from them,” Hanson said. But the consortium disagrees sharply.

“We wanted that package and we didn’t get a chance to bid it,” said Don McPherson, owner of Mikol Missile Air of Gardena.

HBI, a Paramount machine shop, is also engaged in a long-standing dispute with McDonnell, claiming the company owes it more than $100,000 on charges when it delayed accepting delivery of parts already in production, said Kenneth Stevenson, general manager of HBI.

Stevenson said McDonnell had requested delivery of various structural parts for the MD-11 in June, 1992, but then stretched the schedule by six to nine months. McDonnell later accelerated the schedule, forcing HBI to work overtime, and then again asked to slow down the deliveries.

Stevenson also described as a “bunch of junk” various tools that McDonnell supplied to HBI for producing C-17 cargo jet parts. The tools were various holding fixtures needed to form parts on computer-controlled machining centers.

“We had to make our own tools and then Douglas refused to pay,” Stevenson said. When Stevenson refused to back off from demanding compensation, the company pulled about half a million dollars’ worth of work out of his shop--after HBI had purchased a $250,000 special machine for the job.

But Hanson replied: “We have 4,500 companies on our supplier lists. To have some that are unhappy is not to be unexpected.”

Indeed, not every McDonnell subcontractor is irked.

Russ Fieberg, founder of Rustec Engineering of Mission Viejo, said McDonnell remains the largest customer for his specialized tools used to assemble electrical connectors. Fieberg has cut his staff from 10 employees to just three, not counting his son and wife.

“I know Douglas has gone through a lot in the last five or 10 years and it has been rough on everybody,” Fieberg said. “But they treat their subcontractors pretty good.”

Although McDonnell has set up out-of-state plants, Rustec continues to receive orders from those plants.

“I don’t blame them for going out of state,” Fieberg said. “I would move out of state myself in two minutes if I got the chance.”