Boeing plans more cuts in the Southland
As the federal government reduces military spending, aerospace giant Boeing Co. is continuing to shrink its footprint in Southern California.
One of the region’s largest employers, the Chicago company said it is trimming its executive workforce 30% from 2010 levels, selling office buildings in Seal Beach and demolishing one in Huntington Beach. It has already sold property in Anaheim.
These are the latest moves by the company in the last two years to bring down costs by relocating defense programs, slowing production lines and reducing its workforce in Southern California.
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For decades the region has played a major role in Boeing’s defense business, with thousands of employees scattered from Palmdale to Seal Beach working on technology that touches virtually every aspect of the U.S. military.
“The business base in Southern California isn’t what it once was,” said Todd Blecher, a Boeing spokesman. “There are elements of all our campuses out there that are being vacated.”
With 19,922 workers, California still has the most Boeing employees of any state other than the one in which it was founded, Washington. But the workforce is a far cry from 10 years ago when it hovered around 35,000 workers and Boeing was the largest private employer in Southern California.
U.S. military spending — which grew by double digits after the Sept. 11, 2001, terrorist attacks — is now expected to decline by $487 billion over the next decade.
Dan Stohr, spokesman with the Aerospace Industries Assn., an Arlington, Va., trade group, said defense firms across the country have cut jobs and facilities because of federal budget constraints.
“The budget pressures have forced companies to reduce costs wherever they can,” he said. “The companies know they need to become as lean and efficient as possible.”
In 2010, Boeing embarked on a campaign to drive down costs to become more affordable to the federal government.
That same year, the company announced it was relocating two key defense programs from its sprawling Long Beach plant to Oklahoma City. In January 2011, Boeing cut 900 jobs in Long Beach again. This time, its C-17 cargo jet assembly line was affected.
The company also issued layoff notices in June 2011 to 100 employees at its Space Exploration division in Huntington Beach as the nation’s space shuttle program came to a close.
Boeing said cost-cutting measures have helped the company achieve $2.2 billion in savings already. Boeing believes unloading office space will assist in reaching a goal of $1.6 billion in additional savings by the end of 2015.
As part of an ongoing effort, Boeing is consolidating its Southern California facilities, with the next phase focusing on reducing excess office space that it owns. The company has decided to close two buildings in Seal Beach that once made up part of Boeing’s space and communications unit with the intent of selling those buildings next year.
Boeing said it will relocate employees to other building sites in the region.
“We hate to see them go,” Seal Beach Mayor Mike Levitt said. “For the workers that are leaving, they’re not going to be patronizing our shops and restaurants anymore. It’s a shame. They’ve been good neighbors to Seal Beach.”
Nine other buildings remain on the firm’s 45-acre campus in Seal Beach, near Seal Beach Boulevard and Westminster Avenue.
The company’s Seal Beach campus was once corporate headquarters to Rockwell International Corp. — builder of the space shuttles, the Apollo spacecraft that went to the moon and the B-1 bomber — but transferred to Boeing in a 1996 sale.
Boeing’s Anaheim facility was the birthplace of the guidance systems for the world’s first nuclear submarine and where components for the manned space program were developed.
Boeing is moving from the facility, which boasted 36,000 workers at its Cold War peak, to its complex in Huntington Beach.
At Huntington Beach, Boeing has vacated two buildings and relocated employees elsewhere within the campus. One of those buildings is set to be demolished next year, and the other one will be filled by employees from Seal Beach.
“These changes are necessary to preserve the company’s ability to remain competitive while meeting its customers’ needs with the best and most affordable solutions in the current challenging budget environment faced by our customers,” said Brittany Kuhn, a Boeing spokeswoman.
Defense isn’t the only aerospace industry affected. On Wednesday, Pratt & Whitney Rocketdyne in Canoga Park announced workforce reductions of about 100 employees.
“The uncertain future of the space industry and current economic conditions have created an environment where we must take these steps to ensure we remain competitive,” said Carri Karuhn, a company spokeswoman.
The job cuts have had a deep effect on the local economy, said Robert Kleinhenz, chief economist for the Los Angeles County Economic Development Corp.
On average, an aerospace employee in L.A. County makes $88,100 a year, he said. That’s 66% more than the average worker.
“Certainly, job reductions in the aerospace industry will have an effect as it works its way through the local economy,” Kleinhenz said. “But all these decisions are being made against a backdrop of a number of changes in the industry.”
