BIG CUTS AT AEROSPACE GIANT : Hughes to Trim 4,400 Jobs : Defense: Layoffs will close nearly all of the Fullerton plant. Cuts will also be made in El Segundo, Long Beach and Santa Barbara.
Hughes Aircraft Co., delivering a severe reminder that painful aerospace cutbacks in California are far from over, said Monday that it will lay off another 4,400 defense electronics workers in Southern California and close virtually all of its sprawling plant in Fullerton.
The layoffs will occur over the next 16 months at the Fullerton site, which now employs 6,800, and in El Segundo, where Hughes has 7,800 workers, along with some of Hughes’ smaller defense systems plants, such as Long Beach and Santa Barbara.
“All defense locations will be affected,” said Hughes Chairman C. Michael Armstrong. The plants make such products as ship-based radar gear, air defense systems and commercial air traffic control equipment.
The precise number of layoffs at each location will largely depend on how many people working in Fullerton are transferred elsewhere, retire or resign, the company said. About 700 employees will remain in Fullerton in leased buildings, Hughes said.
“It’s chaos here today, and nobody’s working,” Doug Erickson, 35, a Hughes engineer in Fullerton, said after the announcement. Erickson said he expects to be offered a transfer to El Segundo, but added, “I really don’t want to go.”
The layoffs alone represent 9% of Hughes’ worldwide work force of 51,000, and are expected to deal a major blow to portions of Orange County, where Hughes is one of the largest centers of industrial employment. Hughes employs 34,000 in California overall.
But Los Angeles-based Hughes is still saddled with far more factory capacity than it needs because of the slide in defense spending, even though it has already slashed more than 10,000 jobs in recent years.
The company said flatly that it must slim down further to survive the post-Cold War era. “People keep asking when this is going to be over,” Armstrong said in a phone interview. “It’s going to be over when the defense budget stabilizes and our costs are competitive.”
In the early 1990s, Hughes consolidated its missile production--which had been spread among several sites in California and elsewhere--into one plant in Tucson.
The fact that Southern California accounted for such a large part of the defense industry’s buildup in the 1980s “now is the reason why Southern California is bearing such a brunt in the downsizing,” Armstrong said.
Indeed, analysts said Hughes’ announcement won’t be the last in California. “We’re about two-thirds of the way through this downsizing,” said Nancy Bolton, an analyst with the UCLA Business Forecasting Project.
Her group estimates that another 60,000 aerospace workers statewide will be laid off by the end of 1996--when California’s total aerospace employment will drop to about 131,000, or a third of its peak of 383,000 in 1986.
Those figures don’t include additional jobs that are lost at parts makers, restaurants and other suppliers whose business suffers because of the aerospace industry’s slump--what economists call the “multiplier effect.”
Taken together, the additional aerospace-related cuts also won’t help California’s anemic economic recovery, though some analysts said the rest of the state’s economy is trying to overcome the industry’s severe contraction.
“Most industries outside of aerospace are recovering,” said Ted Gibson, principal economist with the state Department of Finance. He also estimated that by 1997-98, the defense and commercial aerospace industries will be slowly expanding again.
Some economists also said the latest Hughes job losses and transfers may not be all that important to the overall Southern California economy. But that’s no consolation to the communities directly hit by Hughes’ announcement Monday.
“Locally, this is going to have significant impacts,” said Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County. “All of the businesses in the area will feel it.”
The announcement capped months of speculation for anxious Hughes workers and nearby businesses. Hughes, part of GM Hughes Electronics Corp., which in turn is a unit of General Motors Corp., had said in May that it was studying how to consolidate its defense-electronics work.
Hughes said it needed to eliminate about 3 million square feet of manufacturing and office space--most which would be accomplished by closing the 350-acre Fullerton plant. Hughes expects to sell 286 acres of the site, while keeping 64 acres for parking and two office buildings that the company will continue leasing.
(Hughes’ headquarters in Los Angeles and its satellite and communications plants in El Segundo are not involved in this consolidation.)
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The Fullerton plant opened in 1957 and employed as many as 14,500 people in 1986. The site is expected to fetch more than $75 million in one or more sales. Hughes reportedly has been quietly shopping portions of the site to home builders.
The consolidation stemmed from Hughes’ formation of a new subsidiary in March called Hughes Aerospace & Electronics Co. That move merged the firm’s aerospace, defense, missile and systems groups. The unit, which accounted for nearly $7 billion of GMHE’s $13.5 billion in sales last year, will be based in Washington.
Armstrong traveled to Fullerton to make the announcement Monday morning to more than 25,000 Hughes workers, both via a closed-circuit television broadcast and in personal meetings with groups of employees.
In the interview, Armstrong said California’s costly business climate played no role in Hughes’ decision, because there is nothing the state can do to prevent the defense industry’s shrinkage.
But he repeated a favorite theme that California must keep improving conditions if it hopes to attract new investment in other industries. Armstrong noted that recent changes in workers’ compensation rules and other regulatory relief in California contributed to Hughes’ decision to invest in a cellular telephone plant in San Diego and an electric-vehicle parts facility in Torrance.
“My hope is that after the elections (in November), California will continue changing to be more competitive, so those initial investments can become large investments,” he said.
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Times staff writers Don Lee, Ross Kerber, John O’Dell and Debora Vrana in Orange County contributed to this reporter.
Job Upheavals at Hughes
At its peak in the mid-1980s, Hughes Aircraft Co. had about 82,000 employees involved in aerospace. Today, the number has dwindled to about 51,000 workers. Here’s a look at which plants remain open after the latest round of closings:
* El Segundo: Employs about 7,800 people to build lasers, night vision equipment and radar sets for fighter aircraft.
* Tucson: More than 7,400 workers at this facility build tactical anti-tank and anti-aircraft missiles.
* Tijuana: Some 200 employees assemble electronic wiring harnesses.
* Santa Barbara: About 1,450 workers build infra-red detector arrays and space sensors.
* Long Beach: About 975 employees provide technical field support for various military hardware such as tactical missiles, communications systems and ground-based radar.
These plants have already closed or will soon:
* Fullerton: Has about 6,800 employees and will phase out most operations by the end of 1995, displacing about 6,000 people. Two small buildings will remain with between 700 and 1,000 employees to develop and build command and control systems and air traffic control systems.
* Canoga Park: Had about 1,900 workers. Announced in June, 1992 that the plant would shut down by Oct. 6, 1994. The facility was the headquarters and engineering center for missile systems group employees, which have since transferred to Tucson.
* San Diego: Had 2,500 employees. Was an Unmanned Strike Systems division which made the Tomahawk and advanced cruise missile.
* Pomona: Had 2,400 workers. Air Defense Systems division which made the Standard missile and Phalanx gun system.
* Rancho Cucamonga: Had 1,500 workers. Air Defense Systems division which made the Stinger and the Rolling Airframe missile.
Note: The San Diego, Pomona and Rancho Cucamonga operations were acquired from General Dynamics in August, 1992, and were transferred to Tucson by the end of 1993.
Sources: Company reports, wire reports
Researched by ADAM S. BAUMAN / Los Angeles Times
