Bust Amid the Boom
Boeing’s layoff announcement Friday marked the latest in a spate of California job cuts disclosed in recent months by aerospace, financial services and retail firms that, economists say, are likely to slow down but not derail the region’s economic growth.
Since last November, mergers and job reductions have been announced by Ralphs Grocery, Raytheon, Washington Mutual, California Federal Bank and Boeing. From all of these, almost 16,000 jobs are expected to be erased in California, a good chunk of them in Los Angeles County. That doesn’t include any indirect losses at law firms, accounting groups and other business services that support and rely on these corporations.
Given that the state added nearly half a million jobs last year, those cutbacks, even counting the multiplier effect, are relatively tiny. Still, places like the South Bay, home to much of Southern California’s remaining aerospace industry, and Irwindale, the distant headquarters for both Home Savings of America and Hughes Family Markets, both of which are being acquired, will feel a greater share of the pain.
“Collectively, it’s a sign of a slowdown,” said Esmael Adibi, an economist at Chapman University in Orange. Adibi, however, remained sanguine about the region’s overall prospects, and he said the recent job eliminations were not large enough to warrant a change in his forecast.
Adibi said the latest cuts, some of which were anticipated, were simply a continuation of mergers and restructurings that have been going on throughout the 1990s. Still, the magnitude and the successive nature of the recent moves seemed reminiscent of the recession years, when such announcements were commonplace, and they clearly disturbed some economists, who predicted that pressures would only mount for other companies to take similar action to raise profits and compete.
“This is a splash of cold water in your face,” said Jack Kyser of the Economic Development Corp. of Los Angeles County. “Don’t forget you got Asia out there,” he added, referring to the financial turmoil abroad that is expected to slow demand for California goods. Plus, he said, there are fears of a possible strike by the Screen Actors Guild later this spring.
“There is forward momentum, but there is chaos,” he said.
Howard Roth, a Bank of America economist in Los Angeles, said the biggest concern was Los Angeles County, which has trailed its neighboring counties in job growth and remains well below its employment base of 1990. Los Angeles County added about 83,000 payroll jobs last year, growing by 2.2%, compared with an annual average growth rate of 4.9% for the Inland Empire and 3.8% for Orange County.
Irwindale, about 18 miles east of downtown Los Angeles, figures to be particularly hard hit. Earlier this week, Seattle-based Washington Mutual agreed to buy H.F. Ahmanson, parent of Home Savings, and it plans to close Ahmanson’s sprawling headquarters campus in Irwindale, where some 2,600 people work. Although layoffs have not been detailed by Washington Mutual, up to 3,500 jobs are expected to be lost in the $10-billion merger of the nation’s two largest thrifts.
Irwindale also is where Hughes, which in November agreed to join with Ralphs, has its headquarters and warehouse. The warehouse is being closed, but a Ralphs spokesman said Friday that only about 100 jobs are expected to be lost through the merger.
The brunt of Raytheon’s 5,200 job cuts, which were reported in January, will fall on the former Hughes Aircraft section in El Segundo, where several major buildings will be vacated. The firm, which is taking the action following its acquisition last year of Hughes Aircraft, is also shutting facilities in Torrance, Westchester and Irvine, among other places.
Of Boeing’s overall cutbacks of 8,200 jobs, almost 6,000 will be in Southern California, the bulk in Long Beach, Seal Beach, Monrovia and Downey. Seattle-based Boeing blamed the cutbacks on its previously announced plan to end production of the MD-80 and MD-90 jetliners at the former McDonnell Douglas operation in Long Beach.
Although Boeing said the job cuts would come largely from attrition and retirement, workers were not comforted. “A mortgage doesn’t go away just because your job does,” said a 48-year-old engineer who said she had gone through an aerospace layoff before, during which she worked at Home Depot.
Beverly O’Neill, mayor of Long Beach, Friday spoke of the strides the city has made in bouncing back from defense cutbacks and relocations. She pointed to the new aquarium and retail center, saying they illustrated the city’s transformation from an economy based on defense, oil and aerospace to one geared toward tourism and international trade.
“We started a comprehensive recovery plan, but it’s all new,” she said.
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Times staff writer Vanessa Hua contributed to this report.
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Tally of Layoffs
Despite the area’s burgeoning economy, Southern California could loose up to 16,000 jobs as a result of recent layoff announcements. A look at job cuts made here in the last five months:
Jan. 23: Raytheon says it will eliminate 5,200 at facilities stretching from Santa Barbara to San Diego over a two-year period.
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Feb. 5: Glendale Federal Bank and California Federal Bank announce that they plan to merge in a $2.5-billion deal. Layoffs are estimated at 1,000, although company officials say most cutbacks would be accomplished through attrition.
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March 17: Washington Mutual announces plans to buy H.F. Ahmanson for nearly $10-billion. If approved, the merger is expected to spur that loss of 3,500 jobs.
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March 20: Boeing says it will cut nearly 6,000 jobs in Couthern California over the next two years.
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Source: Times research
Researched by Jennifer Oldham / Los Angeles Times
