Worker’s Tales : Coattail Companies Cringe at Defense Giant’s Pullout

The scores of machine shops, parts suppliers and professional firms that fill acres of industrial parks in and around Orange County and feed heavily from the area’s large manufacturing firms are bracing for a famine as Hughes Aircraft Co. prepares to shut its Fullerton plant.

The plight of Hughes’ suppliers has been overshadowed by concern for the 6,800 workers at the 350-acre facility. Company officials say that between 800 and 1,000 of them will be laid off and the rest will be offered transfers to other Hughes plants in Southern California or out of state.

But the suppliers--who bend, grind and shape metal, make special tools, prepare engineering calculations and supply note pads to Hughes and companies like it--have suffered alongside defense contractors during the industry’s decline over the past five years.

Many fear the Hughes plant closure, expected to be completed at the end of 1995, will further damage their already ailing businesses.

The defense cutbacks that began under President Ronald Reagan and have continued through the George Bush and Bill Clinton years “just killed us,” said Shayne Jennings, co-owner of Orange Tool Co. in Costa Mesa.

She and her husband employed 32 workers at their machine shop five years ago. But a sharp drop-off in work obtained from larger area firms, including Hughes and Rockwell, has slashed revenue, leading them to cut their payroll to seven.

“It’s such a filter-down situation, it’s going to affect all the processes we do and the orders we can get,” Jennings said of the pending Hughes closing.

Continental Heat Treating in Santa Fe Springs, which works for the subcontractors of defense companies, also is heavily dependent on defense dollars.

Nearly everything produced by the defense industry needs heat treatment, which subjects metal to extremely high temperatures to increase its strength, said Continental’s owner, Jim Stull.

“Since 1989, I have seen three major competitors go under,” said Stull. Continental is down to 28 employees, from 55 four years ago, he said.

At A&A; Tool & Die Machining in Santa Ana, managers plan to keep close watch to see which divisions Hughes moves and what the transfers might mean for the future. About 80% of A&A;’s annual revenue comes from sales of custom metal and plastic forming tools and stamps to various Hughes divisions, said Art Cherkezian, a vice president of the company.

David Wagner, national sales manager for Santa Ana-based Pioneer Circuits, said he worries about losing contacts he has built at the Fullerton plant over the years.

He said he expects to make up the business he will lose in Fullerton by selling more to Hughes’ El Segundo plant, but is concerned that he’ll miss out on future contracts as his old contacts from Fullerton move away.

Pioneer has been selling circuit boards to Hughes in Fullerton for the last 10 years. Last year, Pioneer sold $250,000 worth of goods to the company--5% of total sales of about $5 million.

Peter S. Pulizzi, president of a 27-person engineering firm in Santa Ana, said he is waiting for official word from Hughes about whether it will continue his contracts to work on a power-control system for a highway traffic project in Indiana. His firm, Pulizzi Engineering Inc., recently got an order for about a dozen prototypes.

Although Pulizzi said he is “really not sure what GM or Hughes has in mind,” he hopes the projects he has worked on will continue despite the move from Fullerton.

The head of Cal State Fullerton’s engineering department also hopes a longtime relationship with Hughes won’t fade away as the company abandons the site, located a few miles from the Cal State campus.

“I’m saddened. We’ve always considered them a high-class corporation,” said Andy Bazar, dean of the school of engineering and computer science.

Hughes contributes about $100,000 a year to the department in the form of scholarships, equipment and software, he said, and Hughes traditionally hired many of the 350 students the department graduates each year.

At least one Southern California business stands to gain from the Fullerton shutdown: Van Nuys-based Pinkerton’s Inc.

The company now provides guards for most of Hughes’ California facilities but has been shut out of the Fullerton plant. Unionized guards there are Hughes employees and have blocked the company’s attempts to hire subcontractors like Pinkerton’s.

But now several of the Fullerton guards say they expect to be among the employees laid off. “We’re not transferable to other facilities . . . we’re not optimistic,” said one guard, who asked that his name not be used.

As Hughes’ expands its other facilities to accept the Fullerton workers who are transferred, Pinkerton’s is likely to be asked to supply additional services.

Hughes officials declined to comment on their plans for security services at other plants or on how their relationships with longtime suppliers might be changed by the Fullerton closure.

“There are people directly related to (government) contracts, and they’re obviously the main revenue sources for the company. Then there is everybody else,” said Dan Reeder, a company spokesman, who said he included himself in the latter category.