Hughes Looking for 800 Engineers Amid Shortage
Amid a boost in demand in a usually slow-growth industry, the satellite-building arm of Hughes Electronics Corp. is seeking to hire nearly 800 engineers--a task complicated by the nation’s prolonged shortage of highly skilled workers.
The positions, most of them new, account for about 10% of the work force of El Segundo-based Hughes Space & Communications, which Boeing Co. is in the process of buying for $3.75-billion from Hughes parent General Motors Co.
In the last 10 months, Hughes has landed two key partnerships with rivals to collaborate on projects for the defense industry and watched a big commercial deal be resurrected. The division’s current backlog of 35 satellites--delicate instruments that take roughly 18 months to build--is worth about $5 billion.
Industry analysts speculate that Hughes is looking for about 400 engineers and technicians for one of the recent deals: a major subcontract on Boeing’s $5-billion project to build the next generation of military spy satellites for the Defense Department’s National Reconnaissance Office.
Hughes also is trying to replace more than 300 engineers who retired last year and others lost through attrition, spokesman George Torres said. The unit’s labor pinch runs the gamut but is most acute in electrical and software engineering, two specialties seemingly in demand by a majority of companies today.
The division’s needs come at a time of flat growth in the satellite-making sector. That is due in part to the well-publicized debacles of multibillion-dollar satellite phone ventures Iridium and ICO Global Communications Ltd., which have caused Wall Street to cast a wary eye on the industry. Yet some analysts predict that growth will pick up in the next few years as demand soars for television, voice and other data transmissions.
“When you add it all up, [Hughes] is definitely bucking a trend” with its recent deals, said Cai von Rumohr, an analyst at SG Cowen Securities, stressing that Hughes has gained projects that otherwise might be fulfilled by rival Lockheed Martin Corp. Boeing scored a coup last September when it wrested the national reconnaissance contract away from Lockheed.
But some analysts were surprised that Hughes is seeking to hire 800 engineers. Todd Ernst, an analyst at Prudential Securities, said that outside of the national reconnaissance deal, he didn’t see much room for Hughes to grow “unless they are filling in for attrition.”
Von Rumohr said that Hughes’ challenge in finding workers for the Boeing subcontract depends on how quickly the company is able to hire and how soon it needs to put them to work over the life of the 10-year contract.
Analysts also speculated that Hughes might get a boost in employment from the revival of London-based ICO Global, which has been renamed New ICO. Hughes has been working on a $2.4-billion contract to build and launch 12 medium-orbit mobile-phone satellites for New ICO, which emerged from bankruptcy protection in May.
Meanwhile, Hughes is starting to hire engineers and technicians in anticipation of next April’s closing of a $2.5-billion Air Force contract with Lockheed and TRW Inc. to build the successor to the Milstar system, satellites intended to provide secure, jam-proof communication between military commanders and troops in the field.
Because the contract won’t be finalized until next spring, it is unclear how much it will boost employment at Hughes, which will be in charge of the payload and antenna.
Labor experts say Hughes’ vacancies--while clearly a boost to the Southern California economy--are hard to fill in today’s red-hot labor market, in which entrenched technology giants and fledgling companies compete for a dwindling pool of technically skilled workers.
The aerospace sector has faced a particularly hard time hiring software engineers because of competing industries.
“Hughes is going to have to pull a rabbit out of the hat. There’s a talent war going on right now,” said John Challenger, chief executive of Challenger, Gray & Christmas, a Chicago outplacement firm.
While divulging few details, Suzanne Curtin, Hughes’ human resources director, said the company lures new hires “with any means we can, within reason.”
Hughes also is likely taking steps to lure engineers from rivals such as Lockheed, analysts said. Hughes Space division, which controls 40% of the world’s market for satellites in commercial service, posted an estimated $2.3 billion in satellite sales last year. Boeing’s planned purchase of the unit, to be called Boeing Satellite Systems, is expected to close in September, pending scrutiny by U.S. and European regulators.
Shares of Hughes Electronics--which reflect the company’s performance but don’t provide ownership to investors--fell $7.38 to close at $88.88 Tuesday in New York Stock Exchange trading, largely because of investors’ concerns that Hughes Electronics’ DirecTV division may bring in fewer new customers.
