Why Douglas Decided to Keep Jobs in Long Beach

Six months ago, when Douglas Aircraft Co. began searching for a site to build fuselages for its MD-11 jetliners, not even company President Robert Hood was confident that his home work force in Long Beach could compete for the work.

The Long Beach plant needed to slash at least $100 million from its expenses in the next five years to prevent the work from going to Utah or Europe. Douglas Griffith, president of the United Aerospace Workers local that represents the workers, believed initially that “we didn’t have a 20% chance.”

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But then Hood, Griffith and a team of other corporate, union, state, local and utility officials spent several weeks developing a $138-million package of financial incentives and cost cuts, leading Douglas to formally announce Tuesday that Long Beach had won the job after all.

Douglas said that this summer it will start hiring more than 1,350 people--a number that could eventually grow to 2,000--to begin assembling fuselages for the MD-11, the company’s 300-seat wide-body jetliner. The work will be done in a cavernous 500,000-square-foot building near the MD-11’s final assembly line.

“It’s great news,” George Duran, an electrical-wiring installer on the MD-11, said Tuesday morning. “I knew we had the best chance of getting it.”

Griffith said about 85% of those hired will be furloughed Douglas employees with the most seniority. The assemblers hired on the fuselage project will make about $20 to $21 an hour--the average for hourly workers at the plant.

Hood told a news conference that Douglas’ decision “reflects a fundamental change in the way California does business,” referring to the way Douglas, a unit of McDonnell Douglas Corp., used one of the state-sponsored “red teams” that work to pare the state’s high business costs and thus keep firms from leaving.

Gov. Pete Wilson, speaking to the conference by telephone, called Douglas’ move “a cause for celebration” and said California will keep working to remain “as competitive as it possibly can.”

“We’ve got to continue to be hungry for jobs in California,” Wilson said.

Key parts of the incentive package include $37 million in new labor agreements that reduce labor costs but do not cut workers’ salaries, $7.8 million in state-supported employee training, tax incentives of more than $25 million and more than $10 million in lower utilities costs.

Griffith said the labor savings will mainly come from changes in workers’ classifications and assignments that will make them more productive.

Douglas’ action is certainly a welcome change for the 10,000 people who still build its commercial jetliners in Long Beach, and for the city itself, which has struggled to scale other economic hurdles such as the closure of the Long Beach Naval Station.

“This is a wonderful day for Long Beach,” the city’s mayor, Beverly O’Neill, told the conference. “We have aggressively worked to attract and retain businesses.”

Yet the number of new Douglas hires pales in comparison to the 33,000 people the company has laid off since 1990 because of a sharp drop in orders for its commercial jetliners. And there is still concern that should Douglas MD-11 orders not swell noticeably soon, the MD-11 production line could slow even more next year.

Long Beach is where Douglas performs final assembly not only of the three-engine MD-11, but also of its two twin-engine jetliners, the MD-80 and MD-90.