Northrop to Cut 3,000 From Work Force : Aerospace: Most pink slips in latest round of reductions will be handed out at facilities in Los Angeles County.
Northrop Corp. is eliminating another 3,000 jobs this year, principally in Los Angeles County, another grim reminder that the aerospace industry continues to face an unrelenting retrenchment certain to cause additional damage to the Southern California economy.
Northrop plants in Pico Rivera, Hawthorne, El Segundo and Palmdale will account for 2,500 of the job losses, while the company’s facilities in Massachusetts, Georgia and Illinois will account for the rest, a Northrop spokesman said Thursday.
The cutbacks will trim about 10% of the work force of 30,000 Northrop had at the start of the year. Northrop employment peaked at 48,200 at the end of 1987, before cutbacks in the B-2 bomber program started, and before the firm lost the competition to build the advanced technology fighter.
Northrop said the latest cutbacks were driven by the need to cut costs, streamline operations and reduce production in line with lower defense spending.
The Century City-based firm said 700 of the 3,000 workers have already left their jobs. Northrop is cutting 1,000 jobs in Pico Rivera, 1,000 in Hawthorne, 300 El Segundo and 200 in Palmdale and at Edwards Air Force Base.
Los Angeles County, the nation’s defense capital, is not likely to crawl out of its economic trough until early next year, although California at large could emerge from its lengthy recession by the second quarter of this year, said UCLA economist Larry Kimbell.
California will lose another 80,300 aerospace jobs over the next six years, coming on top of 155,500 losses since 1985, Kimbell predicted. By the end of the rout, the state would be left with 147,100 aerospace jobs, he said, adding, “The outlook remains very negative.”
Northrop disclosed the job cutbacks in Chairman Kent Kresa’s letter to shareholders in its annual report, in which he recalled that several years ago the firm began efforts to consolidate divisions, vacate facilities and cut operating costs.
“Sadly, we also have had no choice but to reduce our valued work force,” Kresa wrote. “However wrenching these decisions have been for everyone affected, we simply must reduce our costs ahead of projected declines in revenues.”
Since defense spending peaked in 1985, the Pentagon’s annual budget for procurement has plummeted from $118 billion to just $44.5 billion this fiscal year, adjusted for inflation. And the annual budget for research and development has dropped from $40.5 billion to $34.8 billion.
The job losses Northrop disclosed Thursday reflect the budget cutbacks enacted two years ago, because it takes about that long for federal funding to wind through the long pipeline to the industry.
Dan Flaming, president of the Economic Roundtable, a privately funded economic research group, said the aerospace bust has been accompanied by a period in which Los Angeles County has lost other high paying industrial jobs as well.
“I don’t see much happening that will replace these aerospace jobs with jobs of equivalent quality or put these people back to work,” Flaming said. “These aerospace jobs have buying power in the local economy and tax paying power that supports local government services.”
Although the aerospace industry will continue to drag down the economy, there are wild cards that could substantially improve the outlook in Southern California, experts say. Earthquake reconstruction efforts fueled by federal assistance are providing a short-term burst of spending.
In addition, it is impossible to measure the impact of new small high-technology firms that are likely to be founded by former aerospace scientists and engineers. There is anecdotal evidence that such growth has begun, but measuring its potential remains difficult, according to Flaming.
So far, it appears that high-paying aerospace industry jobs are being replaced mostly with jobs in the service sector or non-durable manufacturing companies, such as apparel firms, Flaming said.
Kimbell also said that many of the $15-an-hour manufacturing jobs being lost in aerospace are being replaced with temporary or part-time jobs that make the employment picture look better than it really is.
Kimbell said the glut of unemployed workers will be cleared by individuals leaving California, dropping out of the work force or taking lower paying jobs. The other possibility--the creation of new high-paying jobs--is not likely to offer real hope to the jobless for several years, he said.
* BID FOR GRUMMAN
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