Hughes to Keep Twice as Many Jobs in Fullerton : Aerospace: Plant reconfigurations mean the company can retain 1,400 positions. However, 1,000 layoffs are predicted by year's end.


Hughes Aircraft Co., proceeding with the closure of most of its Fullerton operations, says it now expects to keep 1,400 jobs here--almost twice as many as it had initially projected.

Layoffs and transfers began almost immediately after September's announcement that the company would shut down most of the huge aerospace complex by the end of 1995. Red dots now mark the doors of vacant offices meant to stay that way.

By rearranging work areas and doing away with some private offices, though, Hughes will be able to keep more workers in the remaining space than the 700 it had initially projected, company spokesman Dan Reeder said. "Now that we've gone through the logistics work, we have a much more detailed idea of what the numbers are likely to be," he said.

However, that has not reduced the number of layoffs, which still is expected to total nearly 1,000 by year's end. Nor has it done much to boost the morale of workers, many of whom will not know for months yet if they will be kept on.

"Morale's still pretty low. I think they figured the (September) announcement would clear up a lot, but it hasn't," said Nancy Huebotter, a technical writer. "People are still in a transition phase, and everybody's thinking about whether they go or not."

Executives at Hughes, which is part of GM Hughes Electronics Corp., may have found transferring people to other sites more difficult than they had expected, said Esmael Adibi, an economist at Chapman University in Orange. "If you're a firm that relies heavily on skilled workers, it isn't as easy to move as people think. You have to have some assurance that enough of your people will move with you," he said.

That the company is taking a flexible approach to its restructuring is a good sign, Adibi and other analysts said, because the company is facing the realities of competing in the private sector, which it must do to survive cuts in the military spending that for years had been its main business.

"In the past they pretty much knew what was in the pipeline," Adibi said of pending defense contracts. "Now what's happening is that they know they have to go to commercial markets, which are affected more by the condition of the economy, the exchange rate, competition."


John Harbison, a consultant at the Los Angeles office of management consulting firm Booz, Allen & Hamilton, lauded Hughes as "an example for a lot of other companies out there."

"This is a company whose culture, for many decades, was not to worry about costs. . . . To suddenly get these guys oriented on the customer will take a lot," he said, "but they're doing it."

The company's remaining employees have responded in various ways to the new frugality, with some scrambling to complete projects before their divisions are transferred and others working on their resumes.

"A lot of supervisors or other workers, you can see they're loafing," said John Rosas, a shipping department employee who has been at the company 14 years but expects to be laid off next month.

"The more you work, the faster the work gets done, and the quicker they're going to close the place," he said.

Rosas said he is motivated to be as productive as possible because he may need personal references soon. Also, he wants to keep his performance level high in case openings for which he might qualify are posted within Hughes.

Other employees said the atmosphere is improving customer service because, in the climate of uncertainty, workers are approaching their jobs one day at a time.

"People are still paying as much attention to the real work, as far as getting products out the door," said Linda Thurk, a logistics specialist. "But they're paying less attention to things that are handed down from upper management, all the paperwork."


Hughes, which in the mid-1980s employed 15,000 workers, was down to about 6,100 in September, when the plant closing announcement was made, Reeder said. Of those, 238 workers have since been laid off, and 900 have been transferred, most of them to Long Beach or El Segundo. An additional 39 workers have resigned, he said.

The closing of the plant, which for nearly four decades was Fullerton's largest employer, stemmed from Hughes' formation a year ago of a new subsidiary called Hughes Aerospace & Electronics Co. The new entity, based in Washington, merged the company's aerospace, defense, missile and systems groups, which accounted for $7 billion of GM-Hughes' $13.5 billion in sales for 1993.

The increased number of people to stay at the Orange County plant will benefit the local economy, analysts said, though the restructuring is still a major blow.

"Any amount of jobs that stays in Fullerton is good news for the region in terms of the money that will stay here," said Anil Puri, chairman of the economics department at Cal State Fullerton.

The real effect will not be clear, Puri said, until the downsizing is completed and Hughes knows how many of its remaining 4,676 employees in Fullerton are willing to accept a longer commute to stay in the area.

When the closure announcement was made in September, economists cited the "multiplier effect"--the loss of business to parts makers and other suppliers, as well as scores of local businesses from restaurants to travel agencies that are hurt when people and jobs leave. That fallout will continue for months, if not years, analysts said.

Even if government spending were to show a sharp increase, Puri said, and technology companies stood to benefit, the biggest winners would likely be smaller companies, rather than giants like Hughes.

"I think in a few years a different type of defense industry will develop," Puri said. "Perhaps it will be more independent producers, and they'll all compete on costs. I don't think you will see the big plants again."


A Hughes History

At its peak, Hughes' Fullerton site employed 15,000. But aerospace cutbacks and company reorganizations have diminished staffing to 4,676. The evolution of Hughes' presence in Orange County:


* Plant opens: El Segundo-based Hughes Aircraft Co. opens Hughes Ground Systems Group in Fullerton with 500 employees. Principal projects involve electronic radar production. First system is installed aboard the destroyer Albany.


* NATO contract: Company receives $400-million contract to build NATO air defense system.


* Investment begins: Capital investment program that lasts through early part of decade begins.


* Revenue source: $1.2 billion in sales by Ground Systems Group accounts for 22% of company's revenue.


* Defense prevails: 14,000 employed in 2 million square feet. Air defense systems built for 25 countries, including the United States and Canada. Revenue sources 100% defense-related.


* Expansion planned: $50-million expansion set for October, with completion expected in 1986. Plans call for construction of two three-story buildings totaling 380,000 square feet. Employment reaches 15,000.

* Investigation ends: Federal grand jury in Los Angeles finds no evidence that Hughes Aircraft tried to bribe arms merchant Adnan Khashoggi during negotiations to build a Saudi Arabian air defense system. Eight-month investigation begins when former Fullerton employee alleges that a $1-million bank draft exchanged hands to buy Khashoggi's influence.

* Sale completed: Hughes Aircraft Co. is acquired by General Motors for more than $5 billion.


* Layoffs announced: Hughes announces elimination of 300 jobs at Fullerton site because of lost contracts and overall slowdown of defense spending.

* Bidding war opens: Hughes and IBM vie for multibillion-dollar contract to build new U.S. air traffic control system. If contract is won, majority of work would be performed in Fullerton.


* Contract lost: After $250-million investment, Hughes loses air traffic control system project to IBM. Hughes continues to bid for job to upgrade Canada's ATC system and eventually wins that contract.

* Jobs reduced: Employment drops to 11,800 by year's end.


* Contract won: $91.5-million contract awarded to revamp Taiwan's air defense system.


* Land sale studied: Hughes officials begin contacting local developers to judge their interest in purchasing about 140 undeveloped acres at Fullerton site for residential development.

* Reorganization: Hughes Ground Systems Group renamed Hughes.

* Settlement: Hughes is ordered to pay $3.9-million fine to settle allegations it defrauded government on several contracts to build shipboard defense systems.


* Consolidation discussed: Hughes officials announce that, to remain competitive, they might close Fullerton facility. City officials meet with company officials to discuss impact. Employment stands at 6,100.

* Closure announced: Hughes says Fullerton facility will be closed in next 16 months. Most of land will be sold for development, and 800 to 1,000 positions will be eliminated. Remaining employees will be reassigned.


* Fewer transfers: Hughes officials confirm that as many as 1,400 employees will stay in Fullerton for now, double the 700 the company had first projected. Most will work in the company's information systems division.

Source: Times reports

Researched by JANICE L. JONES / Los Angeles Times

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