Shuttle Disaster Won't Ground Aerospace Firms

By Jerry Hirsch

Feb. 4, 2003 12 AM PT

Times Staff Writer

When the space shuttle Challenger exploded in 1986, subcontractor Tayco Engineering Inc. in Cypress poured money into developing a heating system that now helps keep the seals on booster rockets from cracking. Tayco won a NASA contract for its systems, and its annual sales eventually jumped by 40%.

On Saturday, when Tayco President Jay Chung learned that the shuttle Columbia had disintegrated, the painful news left him with “the same feeling I had when the Challenger blew up.” He doesn’t yet know whether Tayco will be among the companies to come up with technical solutions for the shuttle program, as it did for Challenger.

But he doesn’t see a drop-off in business either. “I’m not expecting any reduced production,” he said.

Indeed, the economic effect of the Columbia catastrophe on California’s aerospace industry is likely to be slight because the shuttle program no longer is a big business in the state, and the program’s workforce has shrunk dramatically.

“A lot of the systems on the craft are old, and the subcontractors are either out of business or moved on to other projects long ago,” said Jack Kyser, economist for the Los Angeles County Economic Development Corp.

All five space shuttles were built in Southern California, and the program once pumped billions of dollars into the economy and employed thousands of engineers, fabricators and assemblers. Many of the major components were made at a former Rockwell International Corp. factory in Downey, now owned by Boeing Co. And the Columbia was assembled at the storied Plant 42 in Palmdale.

Two decades ago, when the Columbia was completed, businesses that were building missiles, spacecraft and various related parts employed 19,400 workers in Los Angeles County, according to the state Employment Development Department. Now the number is just 1,100. Orange County’s comparable employment numbers, which include aircraft workers, have dropped from 17,600 to 13,300.

Tayco builds 180 different parts for the shuttle -- including the type of thermal sensors that first signaled the impending disaster. All told, the shuttle program provides about 10% of Tayco’s annual revenue, or $1.5 million annually for the 100-employee firm. The privately held company doesn’t disclose profit.

Chung said Tayco was involved in enough other space programs -- including Mars missions and the space station -- to avoid layoffs and major cost cutting.

Besides a few small shuttle subcontractors such as Tayco and Mooney Industries in Canoga Park, the bulk of local shuttle employment is found in Huntington Beach, where 600 workers provide mission support at a division of Boeing.

An additional 500 Boeing employees work on the shuttles’ main engine systems at the Rocketdyne division in Canoga Park. And 200 are left at the Boeing maintenance facility in Palmdale, down from 800 a year ago, before the rehab work on the shuttles was moved to Florida to be closer to the launch pad.

Boeing executives say it is too early to speculate about the future of the space shuttle program and its effect on local business and employment. “For now, we are just focused on assisting NASA with the investigation,” said Boeing spokesman Dan Beck.

Manned spaceflight, including the shuttles and the unfinished space station, accounts for about $1.55 billion of Boeing’s business, or 3% of its annual sales and a little less than 3% of its operating profit. Boeing shares closed down 48 cents at $31.11 on the New York Stock Exchange on Monday.

Byron Callan, a Merrill Lynch & Co. aerospace analyst, wrote in a report Sunday that he didn’t believe the shuttle program would be shut down entirely during the Columbia investigation. And he said that contractors have contingency plans with NASA “to cover a stand-down in operations.”

Although 120 subcontractors in the nation provide parts for the shuttle program, the day-to-day operation of the shuttle fleet is overseen by United Space Alliance, a joint venture of Boeing and Lockheed Martin Corp.

Callan said he believed there was enough support for manned spaceflight to limit long-term financial exposure to the four major companies involved in the program. “We hardly expect that Saturday’s tragedy will result in major cutbacks to U.S. space programs -- in fact, the opposite might occur,” he wrote.

With only three shuttles remaining, NASA could order a replacement shuttle to be built or launch a new space transportation program.

Analysts said that actually might result in an economic boost for Southern California, where most of the design and engineering work on America’s manned space programs have taken place.

“It is the most concentrated area of expertise,” said Marshall Kaplan of Strategic Insight, a Washington defense and space consulting firm.

Alliant Techsystems Inc., the parent company of ATK Thiokol Propulsion, which subcontracts work to Chung’s firm, builds the two main solid-propellant booster motors for shuttle launches.

Shuttle work accounts for $380 million, or 17%, of Alliant’s revenue, Callan said. Alliant took a big hit Monday as its shares fell 12%, closing off $6.34 at $48.02 on the NYSE.

Shuttle work amounts to 2% or less of the revenues at the remaining two largest shuttle contractors, Lockheed Martin and Moog Inc. Lockheed shares fell $1.50 on Monday to $49.55, and Moog shares dropped $1 to $30.90, both on the Big Board.

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Shuttle contractors

The space shuttle is maintained by United Space Alliance, a joint venture of Boeing and Lockheed Martin. Although the alliance oversees all 2.4 million parts to each shuttle and farms much work to subcontractors, the shuttle is no longer a major source of employment in California.

Here are some of the companies behind certain shuttle components:

*Boeing, Chicago

Rockwell International built the original orbiters and the company was later acquired by Boeing. The shuttle Columbia was refurbished two years ago at the Palmdale plant where the shuttles were built.

Lockheed Martin, Bethesda, Md.

Makes external fuel tanks and manages data collection for shuttle missions.

ATK Thiokol Propulsion, Promontory, Utah

This division of Alliant Techsystems makes the two main rockets, one on each side of the fuel tank.

Plasma Coating, Gardena

Makes thermal spray coatings for fuel pumps turbine blades.

Tayco Engineering, Cypress

Makes heat sensors for the rockets and space shuttle.

Hamilton Sundstrand, Windsor Locks, Conn.

Subsidiary of United Technologies makes shuttle life-support systems.

Honeywell International, Morris Township, N.J.

Makes cockpit display screens pilots use for navigation.