Boeing Plans to Cut Nearly 6,000 Jobs in Southland
In a damaging blow to the region’s once-thriving aerospace industry, Boeing Co. on Friday announced plans to cut nearly 6,000 jobs in Southern California in the next 18 months, including nearly a third of its work force in Long Beach.
The company said it will eliminate 8,200 jobs nationwide, with more than 70% of the cutbacks in Long Beach, Monrovia and Downey. Facilities in Seal Beach and Palmdale will be reorganized. The Seattle-based aerospace firm blamed the reductions 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.
Officials said that 1,000 workers in Boeing’s military aircraft program will be transferred from Seal Beach to Long Beach, where other military programs already are based.
That loss will be offset by the transfer of 1,100 space systems jobs to Seal Beach from Downey, where the company has a large amount of excess space. A company spokesman in Seal Beach said that no layoffs are anticipated in the reorganization.
Boeing moved into the Seal Beach facility--former headquarters of Rockwell International Corp.--when it acquired Rockwell’s space and defense operations last year. The company made Seal Beach the headquarters for its space transportation units last year after adding McDonnell Douglas Corp. to its stable.
The Seal Beach complex has about 3,000 employees.
As part of that deal, Boeing also acquired the McDonnell Douglas space systems facility in Huntington Beach. None of the nearly 6,000 at the Huntington Beach plant will be affected by the cuts, a Boeing spokesman said.
The scale of Boeing’s cutbacks was unexpectedly large--among the worst aerospace retrenchments since the early 1990s--and comes as the region is still reeling from the elimination of 5,200 Raytheon jobs, announced earlier this year.
The latest action dashed hopes that Boeing would lend its golden touch to the sprawling aerospace operations it has acquired in the state. It also signaled that Southern California faces serious economic damage from the still consolidating aerospace industry.
Boeing, which acquired McDonnell Douglas in August 1997, rejected transferring production work to Long Beach from its overloaded Seattle factories, despite hinting of such a plan to California state officials and union leaders in recent months.
Moreover, Boeing raised warnings of even worse news later this year, saying it will reevaluate its decision to continue producing the MD-11. About 3,000 workers in Long Beach work on that program.
“We are strategically realigning the use of our facilities,” Boeing Chairman Phil Condit said. “These actions are in addition to ongoing initiatives to improve productivity and reduce costs.”
The restructuring announced Friday will result in the closure of the company’s Monrovia electronics manufacturing facility, which employs 1,000 people and supplies the Long Beach plant with aircraft parts. The firm also will shutter portions of its Downey operation and reorganize the work force in Seal Beach.
When completed, the plan will leave about 37,000 Boeing jobs in Southern California.
Boeing insists that most of the payroll cuts will be made through retirements and attrition, but the region will nonetheless feel the loss of thousands of high-paying manufacturing jobs.
“It is very disheartening for the county, because those jobs are just the kind of high quality blue-collar jobs that we need to hang on to,” said Dan Flaming, president of the Economic Roundtable, a business research group. “A lot of people thought there was a light at the end of the tunnel at McDonnell Douglas with Boeing coming in. . . . Now to find that we are losing 6,000 jobs, I feel let down.”
Flaming said the cutbacks would more than wipe out the progress Los Angeles has made in the nascent aerospace recovery since the industry bottomed out in 1996.
Disappointment, Except on Wall Street
The county had 61,200 aircraft jobs in February, a gain of 2,700 since August 1996. Similarly, job growth over the past two years in missiles, spacecraft, electronic components and electronic equipment will take a big hit from the Boeing cuts.
While Orange County’s growing aerospace employment won’t take a direct hit in the cutbacks, many subcontractors in the county are likely to feel pinched if work from Boeing operations in Long Beach drops off.
“It is disappointing,” said David Goodreau, chairman of the Small Manufacturers Assn. of California. “It is going to have a big effect on the subcontracting industry. You may be looking at 1,000 subcontractors in the Southern California region that this will affect one way or another.”
Boeing officials tried to soft-pedal the cutbacks in calls Friday morning to California politicians, saying that the losses could be more than offset in future years as the space business grows.
The company has more than 2,200 engineering and other high-tech job openings in its space and defense businesses throughout Southern California, including 800 at Orange County facilities in Huntington Beach and Anaheim, Boeing officials said.
“I don’t know how anybody could paint this as good news,” said Rep. Jerry Lewis (R-Redlands), chairman of the House appropriations subcommittee that controls the space budget.
The cutbacks at Boeing and Raytheon are in stark contrast to recent decisions by other aerospace firms in Los Angeles, which have elected in many cases to expand capacity and invest in new equipment.
Northrop Grumman has poured more than $100 million into computerized manufacturing tools at its Hawthorne plant, where it produces fuselages for the Boeing 747.
Hughes Electronics Corp., owned by General Motors, is expanding capacity at its communications satellite plant in El Segundo with a new vacuum chamber and component operations. And dozens of small shops, from heat-treating plants to machine shops, say California is not an adverse business climate.
Gov. Pete Wilson’s office called the Boeing news a disappointment. But spokesman Ron Low added: “While this is a temporary setback for California’s aerospace industry, the strength and diversity of the state’s economy will allow us to absorb any job losses.”
In Long Beach, Boeing’s announcement was met with resignation.
“We never like to hear news like this,” said Mayor Beverly O’Neill. “But it was not unexpected. We knew they were discontinuing production.”
Stopped during lunch, Boeing employees said they were not surprised.
“I have fallbacks, other places to go,” said Keith Lardie, a 23-year-old test engineer who was hired in August.
“We’re the redheaded stepchild of Boeing. We knew they were going to do away with some facilities,” said Kenneth Scherwinski, a systems engineer with McDonnell Douglas for nearly nine years. “People saw it coming.”
Kedrick Legg, president of Local 148 of the United Auto Workers, the largest labor union at the Long Beach facility, said employees had been hoping that Boeing would “announce something like a brand new assembly line or something.”
“They’re probably a little disappointed, but at the same time, they’re relieved that it wasn’t worse,” Legg said. “We’ve been in this position before. We’re survivors.”
Boeing rejected as speculation the notion that it was considering moving more production work to Long Beach to help relieve the company’s assembly line pinch in Washington.
“We never made any official statements about additional work going to the Long Beach facility,” said Sean O’Donnell, a Boeing spokesman. “At this point, we don’t have any plans to put any more work there.”
Wall Street analysts, eager to see savings from Boeing’s recent purchases of McDonnell Douglas and the Rockwell defense business, applauded Boeing’s plan.
“They were under a lot of pressure to restructure, and to do it in a dramatic manner,” said Jack Modzelewski, aerospace analyst at PaineWebber. “Plus, the center of gravity has moved to Seattle.”
Traders rewarded Boeing for the massive restructuring plan, bidding the company’s stock price up $2 to close at $53.44 on the New York Stock Exchange.
The new cutbacks at Boeing are in addition to a recently announced plan to eliminate 12,000 aircraft jobs in Seattle and Wichita, Kan., later this year.
They also are in contrast to the company’s plight last year, when it had to hire thousands of workers in Washington to keep the production lines on schedule. Many of those hastily-added workers will be laid off in the coming months as Boeing resolves its production pinch.
Impact Around Southland
Under the restructuring plan, the biggest hit will occur in Long Beach, where about 5,000 positions will be eliminated by 2000. Most of those cuts stem from the cancellation of Boeing’s MD-80 and MD-90 jet programs, which were not selling well.
Other major moves include the closure of the Monrovia plant. Boeing said most of those jobs will be transferred to Texas, and the remaining 100 to 200 employees associated with sensor projects will probably move elsewhere within Southern California, perhaps to Huntington Beach or Anaheim.
In Downey, Boeing will keep 1,900 jobs--primarily on the space shuttle program--in place. The smaller work force there will consolidate into four buildings.
The number of employees at Boeing’s Palmdale facility will stay roughly even; as the B-1 upgrade winds down and some facilities are closed, they will be replaced with another upgrade program.
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Times staff writers John O’Dell and Vanessa Hua contributed to this report.
