F-35 Already Spreading Its Wings
Two weeks after the Pentagon launched its $200-billion joint strike fighter program, the job spigot is starting to open for Southern California’s aerospace industry.
Defense firms headed by contract winner Lockheed Martin Corp. are beginning to hire engineers and other workers for the initial design and testing phase of what could be the nation’s biggest military contract ever.
Century City-based Northrop Grumman Corp. already has transferred nearly 100 employees to its El Segundo facilities, where it will assemble the center fuselage and weapons bay for the new fighter. It plans to hire 1,200 people, mainly engineers, over the next 18 months.
At Edwards Air Force Base, north of Lancaster, officials are looking to more than triple the number of test flight engineers by next summer, hiring 75 to work on the joint strike fighter and other projects. Eventually, the base anticipates having to add 1,000 jobs.
The new jet, to be called the F-35, will be the only new fighter to enter production in the next decade. Variants of it will be supplied to the Air Force, Navy and Marine Corps as well as Britain’s Royal Air Force and Royal Navy. In all, at least 3,000 aircraft will be built to replace the aging fleet of U.S. fighter jets, including the Air Force’s F-16, the Navy’s F/A-18 and the Marine Corps’ AV-8B.
“Aerospace work is going to be growing again,” said Ted Gibson, chief economist at California’s Department of Finance.
The new hires, while small in comparison with the industry’s heyday of the 1980s, will offset some of the recent layoffs at aerospace companies battered by the sharp drop in commercial aircraft business, especially since the Sept. 11 terrorist attacks. And over the 40-year life of the contract, work on the F-35 will create thousands of jobs and generate billions of dollars in revenue in the Southland, helping the region and hundreds of small aerospace companies here remain a significant player in the defense industry for many years.
California is home to 13 of the 67 major subcontractors on the Lockheed contract--more than any two states have--and each subcontractor will be using several hundred local job shops, metal plating and treating operations, tool-and-die firms, technology developers, communications products makers and others to help build jet components.
“This is literally a long-term anchor for local aerospace and high-tech industries,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., a nonprofit organization. “It puts a floor under our industry.”
But no one is expecting the JSF to restore the Southland to its once-preeminent position in aerospace production, not after the severe cuts of the last decade. At its peak in 1988, aerospace employment in Los Angeles County stood at 274,000. But it has since fallen to 110,600, including losses of 4,600 so far this year, Kyser said.
It’s unlikely there will be any single burst of hiring like in Fort Worth, where Lockheed will be assembling the next-generation military jet. Full production on the F-35 won’t begin for about 10 years, and the overall effect on Southern California still will be far short of the 1980s when tens of thousands of people were hired to work on the B-2 stealth bomber and a host of other military projects.
“It’s not an ending-of-the-recession kind of thing,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
Even so, workers at small shops throughout the area breathed a sigh of relief when the government awarded the contract to Lockheed two weeks ago. Boeing Co. made a competing bid, but the Lockheed contract is seen as providing more work for Southern California because of its supplier base.
“I know we’ll get a lot of work from it,” said Manuel Macias, a machinist at Paramount Machine Co. in Rancho Cucamonga.
Macias and the other 34 employees had lost all overtime work after the attacks sent an already weakened commercial aerospace industry into a tailspin. As air travel plummeted, airlines pulled 20% of their planes out of service and verged on bankruptcy before Congress moved to bail out the industry.
“I didn’t think [the attacks] would affect this industry as much as it has,” Macias said. With only six months on the job, the machinist knew that he’d be one of the first to be laid off if the downturn in commercial aerospace business got worse.
The F-35 contract won’t necessarily save Macias’ job because of the long ramp-up period. The initial $18.9-billion engineering and testing phase will involve only 21 jets over the next five to seven years, and the work hasn’t filtered down yet to Macias’ employer. But Paramount, which makes precision metal products such as housings, bodies and manifolds for airplanes, expects to get a chunk of the business, owner Gregory A. Harsen said.
“With what’s going on in the world--the Sept. 11 attacks, future [plane] deliveries canceled, planes taken out of circulation, the aftermarket work slowing, people getting laid off all around you--this contract eased a lot of nerves,” Harsen said.
Economists say it’s too early to know how many jobs overall will be generated by the F-35. But Kyser figures that every 1,000 jobs created at first-tier subcontractors will spawn 600 more at machine shops, foundries and other suppliers. Other economists are even more bullish, saying additional jobs would exceed 1,000.
Two of the main subcontractors, Eaton Aerospace and Parker Aerospace, both based in Irvine, said that about 60% of their work will be handled by outside contractors--and about 90% of those firms are based in Southern California. Each company expects the work to generate $5 billion in revenue for them and their subcontractors over the course of the project.
Kavlico Corp., the largest maker of position sensors and a supplier to Parker Aerospace, hopes to win some F-35 work, said J. Philip Ferguson, sales and marketing director for the 1,250-employee Moorpark firm. Position sensors, part of a plane’s hydraulics, help flight control systems determine the status of rudders and wing flaps.
Parker Aerospace, a unit of Cleveland-based Parker Hannifin Corp., with about 1,400 employees in Irvine, is designing and producing the fuel system as well as the flight controls for the aircraft. Parker says it needs raw materials such as aluminum and titanium, and machine shops to form those into manifolds and pistons, plus electronic measuring devices, among other things.
On any given project, Parker would have contracts with about 50 suppliers like Kavlico, Paramount Machine and Santa Ana metal finisher Embee Inc., each of which, on average, would contract with three more companies for supplies or services. Overall, that would mean work for about 200 companies, all but a dozen or so based in Southern California.
Like many companies that survived the massive layoffs and downturn in aerospace and defense spending in the 1990s, Kavlico, Embee and Paramount Machine have relied more on the commercial sector and on automobile and related industries to keep their workers employed.
Kavlico, which started out solely as an aerospace company, now gets only 25% of its revenue from such work.
Any F-35 work the companies garner will help them maintain their employment levels, especially as other commercial and military contracts end.
Overall, the military end of their mix should increase.
Executives at Parker Aerospace, where 65% of the revenue comes from commercial work, said they see the military business rising about 5% in the current fiscal year. Paramount Machine owner Harsen, said that military work could go from 40% to 45% of its aerospace work now to more than 50% once any F-35 contracts kick in.
The F-35 isn’t the only Pentagon project boosting the defense and aerospace industry in the Southland. Boeing’s C-17 cargo jet is made in Long Beach. Missile components of all types are designed and built here and a national missile defense system would draw heavily from the expertise in the region, said Gibson, the Finance Department economist.
“We already have 250 firms doing subcontracting work on the F-22 fighter, and we’ll have a significant number subcontracting on the joint strike fighter,” he said. The airborne laser weapons system and the Global Hawk unmanned spy plane program also are being tested at Edwards.
For now, though, the downturn, rising unemployment and the sharp drop in commercial aircraft production and repair work are sending many small companies scrambling to attract enough work just to avoid more cutbacks, especially of needed engineers.
