Defense Contractor TRW to Hire 800 Engineers, Chief Says

In an important signal that the Southern California aerospace industry is preparing to enter a long-awaited recovery, TRW Corp. will hire 800 engineers this year, company Chairman Joseph Gorman said in an interview.

TRW sales, profits and order backlogs are now at record levels, putting the company on such a strong footing that it is considering a major acquisition in the defense industry, Gorman said.

“We targeted last year as the time we were going to stop the downturn, and we did that,” Gorman said. “We achieved modest growth in revenues. It has been a tough, traumatic downturn starting in 1987.”

The company’s balance sheet is now so strong that it carries somewhat less debt than is considered ideal. As a result, TRW “would not have any trouble with a multibillion-dollar acquisition,” he said.

TRW is focusing its efforts on companies in similar lines of business, but Gorman declined to identify potential candidates.

Employment in TRW’s space and defense sector, which includes operations in Redondo Beach, San Diego and Washington, plummeted from 30,000 in the late 1980s to 17,000 currently.

While employment dropped, productivity soared, and TRW posted a record $3.2 billion in defense revenue last year, up from $2.9 billion the year before. Contract awards hit a record high in the first half of 1995.

The improvements are partly attributable to the company’s success in diversifying the space and defense sector contracts, raising its share of commercial and other non-defense revenue from 5% of sales during the Cold War to 17% of sales last year and 20% this year. The company’s goal is 30%, Gorman said.

But defense is still the driver of TRW’s operation in Redondo Beach, which has won a series of key classified and non-classified contracts. Analysts who only two years ago were suggesting that TRW was among the weakest contractors in the space industry were simply wrong, Gorman said.

Aerospace analysts are now warning that the nation’s contractors are only partway through what will be a long period of consolidation, and they suggest that years of cutbacks loom, with hundreds of thousands more jobs at stake.

But Gorman and other aerospace executives have said in recent weeks that such projections are far off the mark, in part because the industry has already cut costs so aggressively.

McDonnell Douglas President Harry C. Stonecipher said in a recent interview: “The aerospace bust is over, quite frankly.” McDonnell has essentially stabilized its employment in Long Beach and Huntington Beach, Stonecipher said.

Hughes Aircraft officials say that although many of its operations remain weak and that it is still shrinking, commercial satellite production is growing strongly. And Bombardier, a Canadian aerospace firm, said last month that it is strongly increasing purchases of aircraft parts in Los Angeles.

Gorman said that dire predictions regarding the industry’s future are “highly over-pessimistic” and that the Southern California aerospace industry will emerge from the downturn “intact.” In the longer term, Gorman said, arms control is destined to fail, creating a strong and permanent need for defense.

“The world is a more dangerous place than it was at the height of the Cold War,” he said. “There is no question that for the very long term, there will be proliferation of high technology weapons. There will be proliferation of ICBMs [intercontinental ballistic missiles). It is a question of when, not whether. There will be proliferation of nuclear warhead capability. It is a question of when, not whether. It is naive to believe that we are going to prevent every country in the world from learning about these technologies and using them.”