In a Holding Pattern : Defense, Aerospace Firms Try to Maintain Jobs, but the Future Is Cloudy
After eliminating 15,000 jobs this decade, the eight major aerospace and defense concerns in the San Fernando and Antelope valleys and Ventura County still cannot make any promises about job security.
Hughes Aircraft Co., ITT Corp., Litton Industries Inc., Lockheed Corp., Northrop Corp., Rockwell International Corp., Teledyne Inc. and Textron Inc. have collectively slashed 40% of their local work force since 1990, and they are understandably wary about the future.
Military and aerospace programs are funded by Congress on a yearly basis, and pressure continues to keep spending in check. Many programs affecting local employment, from the space station to Stealth bombers and navigation systems, are under review in the current federal budget process. And if companies don’t win new contracts, more layoffs could come.
“The point is to stay even or try to stay even, which is difficult to do in a down revenue environment,” said Bob Knapp, a spokesman for Litton Industries. Litton has cut employment from 4,800 in January, 1990, to 3,530 today at its Guidance and Control Systems Division in Woodland Hills and its Data Systems Division in Agoura Hills and Moorpark.
“You just have to run faster and faster and make those kinds of advancements in technology to stay competitive,” Knapp said.
To offset defense spending cuts, some companies are pursuing more work from foreign governments, others are pushing into commercial markets and getting contracts to upgrade older aircraft, weapons and space systems.
But these efforts are not likely to increase employment levels anytime soon. “It doesn’t work that way,” Knapp said.
Litton keeps advancing its technology. Its battlefield control systems can respond to incoming artillery almost the instant the shell is fired. Litton is also developing new systems that track and destroy enemy missiles for Lockheed Corp.'s anti-missile system, which is still under development but is often mentioned as a successor to Raytheon’s Patriot missile, which intercepted Iraqi Scud missiles during the Gulf War.
Even so, Litton--which this fall is moving its corporate headquarters from Beverly Hills to Woodland Hills--expects to cut another 250 workers locally by August, 1995, because the number of aircraft and missiles being built continues to decline. Another 100 Guidance and Control workers will move to Salt Lake City this summer, part of an ongoing consolidation of manufacturing operations there.
At Rocketdyne International in Canoga Park, employment has dropped 27% from 8,600 in January, 1990, to 6,300 today. The $900-million-a-year division of parent company Rockwell International makes the space shuttle’s main engines and engines used to launch the Atlas and Delta satellite rockets. It is also developing an electric power system for the proposed space station.
“Our target is to see if we can stabilize our work force, then look for other growth opportunities,” said Paul Ross, Rocketdyne’s vice president of production operations.
But so much depends on unknowns. The Clinton Administration has requested $2.1 billion for the controversial space station project in the next fiscal year, but some in Congress are certain to try to kill the program, which would create a floating laboratory in space. Also, Rocketdyne’s current space shuttle work is confined to maintenance and upgrades on existing engines because no new engines have been ordered.
Rocketdyne just received a $200-million order for 40 Delta engines. But its Atlas engine deliveries are expected to wind down in 1996 because by that time there will be enough of the rockets to satisfy demand.
The company is trying to convert its aerospace expertise into new businesses. Last week it was chosen to design a device for helping turn steam into energy at a solar power plant near Barstow. Rocketdyne has also proposed with Lockheed a radical design for a reusable spacecraft, called a single-stage-to-orbit rocket, to replace the current space shuttle fleet. But that is a decade away at best, and it’s unclear whether this technology would work.
Despite Southern California’s shrinking aerospace industry, some observers are optimistic. “We’re coming to the trough” of defense and aerospace layoffs, said David Lewin, director of UCLA’s Institute of Industrial Relations. In a few years companies that are shifting resources to commercial markets might add small numbers of employees, he said. And if the threat of certain countries developing nuclear capability, such as North Korea, leads to a rethinking of U.S. defense policy--as Lewin believes it will--some companies could reap a windfall of new contracts.
Meanwhile, even Northrop, the only major aerospace contractor that has actually increased local employment this decade, faces a cloudy future.
As the B-2 Stealth bomber has gone to full assembly-line production, employment at Northrop’s assembly plant in Palmdale and its flight-testing operations at Edwards Air Force Base has more than doubled to 4,500. In December, Northrop delivered the first operational wing-shaped B-2 aircraft to the Air Force.
The Air Force has ordered 20 B-2 bombers, which will end up costing $2.2 billion each, with final deliveries scheduled for early 1998. Barring more orders, Northrop’s Antelope Valley work force could decline to 3,000 by the end of the decade, with the remaining workers kept on to refurbish five of the flight-test B-2s to bring them up to operational level, said Northrop spokesman Ed Smith.
The radar-evading B-2 is considered unequaled in its efficiency over long distances, and some legislators favor ordering more. Yet budgetary pressures are so intense that the program might die anyway, said analyst Wolfgang Demisch at BT Securities in New York.
“There are so many mouths to feed in a declining defense budget,” Demisch said. “Thus far, Congress has decided this particular mouth is not a high enough priority.” Without more orders, Northrop’s B-2 work force could fall “in a straight line to zero by very early in the next decade,” he said.
Demisch also sees problems for Lockheed’s Advanced Development Co., the Palmdale operation known as the Skunk Works, famous for developing the U-2 spy plane, and F-117 Stealth fighter that was used in the Iraqi war. Although the Skunk Works programs are shrouded in secrecy, “the evidence suggests at least that the cupboard is relatively bare in terms of new programs,” said Demisch, and that “the Skunk Works is inventing furiously right now.”
Lockheed’s regional employment has plunged to 4,600 today from 14,300 in January, 1990. Nearly 4,100 workers are in Palmdale, with the rest split mostly between corporate headquarters in Calabasas and Lockheed Air Terminal in Burbank, an airport management unit. The big drop in Lockheed’s local work force came in 1990 and 1991 when its aircraft manufacturing operations were shifted from Burbank to Marrietta, Ga.
Lockheed expects no layoffs for the rest of the year, mostly because the Skunk Works has steady work modifying and upgrading the U-2 and F-117 planes, said Jim Ragsdale, a Lockheed spokesman. Beyond that it’s difficult to predict, since no new aircraft have been ordered. The company has proposed building newer versions of the F-117 for the Air Force and Navy and a major modification program for the Air Force’s existing fleet of F-117s. Lockheed also hopes that a $32-million contract it received last year from the Pentagon to develop a new type of fighter aircraft will eventually lead to a production contract.
Rather than depend on the U.S. military, some companies are looking overseas.
ITT Corp. has cut its local employment to 1,020 from 2,120 in 1990 because fewer U.S. ships and aircraft use radar systems made at ITT Gilfillan in Van Nuys and valves and switches from its Aerospace Controls in Burbank and Chatsworth. So ITT is trying to increase sales to foreign countries. “The bad news is, everybody is doing the same,” said Victor Rios, ITT Gilfillan president. “It’s a very, very tough market out there worldwide.”
What’s more, the loss of local jobs as operations continue moving out of state isn’t finished yet. General Motors Corp.'s Hughes Aircraft is relocating its missile systems group from Canoga Park to Tucson as it consolidates its manufacturing. About 1,000 Canoga Park workers will be gone by August, and only a maintenance staff will stay on while the 85-acre site is put up for sale. About 300 Hughes workers will also remain at satellite facilities in Sylmar and at a Van Nuys Airport hangar where the company’s helicopter fleet is maintained.
Another major company that has slashed its local employment because of the declining defense budget is Teledyne, based in Century City.
In four years, Teledyne’s work force at its troubled Electronics Systems Division in Northridge and Newbury Park has fallen by nearly half, to 1,272. Teledyne officials declined to discuss future employment trends.
The most optimistic job forecast came from H. R. Textron in Valencia, where its work force has shrunk to 750 from 1,600 in 1990. Those cutbacks came as defense and commercial aircraft contracts declined, reducing demand for Textron’s control systems and valves.
But in the past year, the company has added a handful of engineering jobs and expects to hire more as new military development programs gear up, said Textron Senior Vice President Craig Johansen at the parent company’s headquarters in Providence, R. I.
Later this decade, Textron will begin producing control systems for McDonnell Douglas F/A-18 fighter planes.
It also hopes to win more aircraft and weapons contracts, and has won more commercial work for Textron’s Cessna Aircraft Co. and Bell Helicopter units.
Textron’s move into commercial markets has even resulted in the sale of a few prototype models of control system valves to Walt Disney Co. for the theme park company’s animatronic figures. And it’s hoping to expand into the automotive market with valves for suspension and breaking systems.
The result of these efforts could be a doubling of H. R. Textron’s work force by the end of the decade, Johansen said. “But,” he added, “a lot of things have to happen.”
Local Aerospace Cutbacks
Major aerospace and defense contractors with local operations have reduced their employment in the San Fernando and Antelope valleys and Ventura County by an average of 40% since January, 1990. Although most companies hope that their reduced employment levels have finally stabilized, they cannot rule out further layoffs if Congress cuts additional funding for their projects.
Regional Regional COMPANY/ employment employment Percent Locations today* Jan. 1990* Change HUGHES AIRCRAFT CO. **1,262 2,500 -50% Canoga Park, Sylmar, Van Nuys ITT CORP. 1,020 2,120 -52% Van Nuys, Burbank, Chatsworth LITTON INDUSTRIES INC. 3,530 4,800 -26% Woodland Hills, Agoura Hills, Moorpark LOCKHEED CORP. 4,600 14,300 -68% Palmdale, Calabasas, Burbank NORTHROP CORP. 4,500 2,225 +102% Palmdale, Edwards AFB ROCKWELL INTERNATIONAL 6,300 8,600 -27% CORP. (ROCKETDYNE DIVISION) Canoga Park, Westlake Village, Palmdale TELEDYNE INC. 1,272 2,279 -44% Northridge, Newbury Park TEXTRON INC. 750 1,600 -53% (H.R. TEXTRON) Valencia, Pacoima TOTAL 23,234 38,424 -40%
COMPANY/ Locations Projects HUGHES AIRCRAFT CO. Missile design Canoga Park, Sylmar, Van Nuys ITT CORP. Radar systems, Van Nuys, Burbank, switches, valves Chatsworth LITTON INDUSTRIES INC. Navigation systems, Woodland Hills, Agoura data systems Hills, Moorpark LOCKHEED CORP. Aircraft design, Palmdale, Calabasas, airport management Burbank NORTHROP CORP. B2 bomber Palmdale, Edwards AFB ROCKWELL INTERNATIONAL Space shuttle, CORP. (ROCKETDYNE space station DIVISION) Canoga Park, Westlake Village, Palmdale TELEDYNE INC. Electronics systems Northridge, Newbury Park TEXTRON INC. Aircraft and missile (H.R. TEXTRON) control systems Valencia, Pacoima TOTAL
* Some numbers are approximate.
** About 1,000 Canoga Park employees will leave by August as operations move to Tucson. Only maintenance staff will remain in Canoga Park, and facility will be put up for sale.