This year, there could be good news for a change. The Los Angeles aerospace industry should benefit from the surging market for commercial airplanes and satellites, although there still will be losses within local defense operations.
Much of the year’s news is likely to emanate from recently completed deals, most notably Boeing Co.’s purchase of McDonnell Douglas Corp. That has raised questions, so far unclarified, about the future of the 10,500 employees at the former Douglas Aircraft division in Long Beach.
As Boeing races to meet delivery schedules for an onslaught of orders for commercial jets, the Seattle-based company is likely to expand the role of its new Long Beach holdings in helping build Boeing planes.
This may involve bringing Long Beach workers and engineers to Washington state. Another possibility is that some facet of production may begin at the Long Beach facilities.
While L.A.’s aerospace industry is vastly smaller than it was before a series of downsizings and acquisitions, the satellite-making and satellite-based telecommunications businesses are among L.A.’s greatest strengths.
Those segments should get even stronger in 1998 as the county’s two biggest players in the satellite business TRW Inc. and Hughes Electronics Corp. benefit from increasing global demand for satellite-based television, telephone, teleconferencing, Internet and other types of telecommunication services.
Hughes Electronics has been solely a space and telecommunications company, following the December 1996 sale of its defense unit to Lexington, Mass.-based Raytheon Co. by parent General Motors Corp.
For the unit’s 15,000 or so Los Angeles County workers who have just become Raytheon employees, the future may not be very bright.
“If you believe the press releases, Raytheon won’t have any layoffs at its L.A. defense facilities,” said John Kutler, president of Quarterdeck Investment Partners Inc., an industry analyst and investment firm in Century City. “But for them to remain competitive, I think they will see it more wise to consolidate some L.A. operations with ones in other states, and that will result in a number of layoffs in L.A. County.”
There may be similarly grim aftershocks after the completion of the merger of Century City-based Northrop Grumman Corp. and Lockheed Martin Corp., which is expected to be completed in the first quarter of 1998.
Upon the completion of the deal, some of the 14,400 or so Northrop workers in L.A. could receive pink slips as new owner Lockheed consolidates operations and diverts contract work to areas of the country where labor and other production costs are cheaper.
The first workers to go are likely to be the 330 or so at Northrop’s Century City headquarters office and another 120 in Hawthorne.
L.A.’s smaller aerospace industry companies that supply parts and services to the aerospace giants may also undergo some convulsions in 1998.
Many companies have had increases in work orders in the past year as Boeing scrambles to keep up with its orders for jets amid parts shortages.
As the company improves production efficiency and gets a handle on its production schedule in 1998, it will have more time to assess its suppliers and weed out those it would not have used if it had not been so desperate.
“Boeing has contract work with a number of companies it wouldn’t have used under other circumstances,” Kutler said.