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Douglas to Build Boeing Planes

Boeing Co. had good news and bad news for Los Angeles last week, announcing it would open a next-generation 737 assembly plant in Long Beach, but saying it would close several labs in the county.

Though the cumulative effect on local employment is unclear, there will likely be more jobs lost than gained; Boeing plans to reduce its total workforce by 18,000 to 28,000 from the current 238,000 by the end of 1999.

Final assembly of the next-generation 737 at the former Douglas Products Division, being renamed the Boeing Long Beach Division, is projected to start in the fourth quarter. By the second quarter of 1999, the company expects to be assembling three 737s a month in Long Beach, eventually to expand to five a month. Some parts of the planes will continue to be built at Boeing headquarter in Renton, Wash.

Meanwhile, Boeing said it plans to close several labs, including those in Downey, Long Beach, Palmdale and Canoga Park. In fact, the company said it plans to vacate all its space in Downey. Activities there will be relocated within Southern California.

Boeing officials said about 600 people will be needed to work on the 737 assembly line in Long Beach. Many of them are currently working on the Douglas MD-80 and MD-90 aircraft, which are being phased out by Boeing; they will simply be moved to the 737 when their work is finished.

Sea Launch Halted

The U.S. State Department has ordered a halt to collaborative work on Boeing Co.’s Sea Launch project in Long Beach because of fears that the company disclosed sensitive information to Russian and Ukrainian engineers working on the project.

Work was actually halted July 27, but the suspension was not announced until last week. Following the order by the State Department, 30 to 40 Russian and Ukrainian engineers left the country.

Boeing says no classified information was disclosed to its foreign partners, but the State Department continues to investigate. No date has been set for the resumption of work; a long delay could jeopardize Boeing’s launch schedule, which calls for a maiden launch in the first quarter of next year.

Blockbuster Deal

Wherehouse Entertainment Inc. stands to become the second-biggest music retailer in the nation following an agreement by Viacom Inc. to sell the company its struggling Blockbuster Music chain.

Under the deal, Torrance-based Wherehouse would pay $115 million in cash for Blockbuster Music, which has 378 stores in 33 states. Wherehouse has 220 stores in seven states.

Blockbuster Music has been a disappointment for Viacom, losing $71.6 million last year. Wherehouse, meanwhile, is on a comeback trail after emerging from bankruptcy reorganization last year; it reported operating earnings of $24 million in 1997.

Northrop Acquisition

In a bid to further expand its information technology business, Northrop Grumman Corp. announced a deal to acquire Inter-National Research Institute Inc. for $55 million in cash.

Reston, Va.-based INRI is a software and application development company that specializes in command and control, tracking, data fusion and mapping for the Department of Defense and its suppliers.

Kent Kresa, Northrop Grumman’s chairman, president and CEO, said the acquisition would put L.A.-based Northrop at the forefront of the defense information infrastructure efforts. Northrop Grumman recently doubled its information technology business to $1 billion following its merger last year with Logicon Inc.

Telemarketing Scams

State and federal agents launched a crackdown on telemarketing fraud last week that resulted in indictments against 66 companies across the country with the largest alleged scheme based in Los Angeles.

Principals Michael Marcovsky and Sheldon Altfield were charged by the Federal Trade Commission with defrauding investors out of $16.5 million by convincing them to invest in a bogus cable TV channel called My Pet TV. L.A.-based telemarketers solicited investments in the channel, which never aired any programming.

Another L.A. company, Automated Systems and Concepts International Inc., was accused of soliciting about $12 million in investments to pay for production of an infomercial touting Elvis Presley memorabilia that never aired.

FAA Chief Flies to Burbank

The head of the Federal Aviation Administration met with Burbank officials and homeowners to discuss the controversial expansion plans for Burbank Airport.

FAA Administrator Jane Garvey met privately last week with Mayor Dave Golonski and City Councilman Ted McConkey, then held a session with homeowners and Burbank’s three airport commissioners. Finally, she met with members of the Burbank-Pasadena-Glendale Airport Authority. The meeting had been arranged by Rep. Howard Berman, D-Mission Hills.

Burbank city officials have been engaged in a lengthy dispute with the airport authority over a plan to add a 19-gate terminal to accommodate expansion of the airport. Burbank officials and homeowners fear the expansion would lead to more flights and more noise.

Mercury Buys Mercury

The board of auto insurer Mercury General Corp. last week authorized the repurchase over a one-year period of up to $200 million of the company’s common stock. The purchases will be made in the open market at the discretion of management.

Based on the $44 mid-point of the trading range of Mercury’s stock over a two-week period prior to the announcement, the $200 million repurchase program would represent about 4.5 million shares, or 8 percent of total shares outstanding as of June 30.

In recent months, Mercury’s stock price has declined by more than 30 percent, leading to a concerted buy-back program. Prior to last week’s announcement, the company had purchased more than $2.2 million of Mercury General common stock for the company’s profit-sharing plan at an average price of $44.

Katz Throws in the Towel

More than two months after the June 2 election, ex-Assemblyman Richard Katz finally conceded defeat last week to Richard Alarcon in the Democratic primary for the 20th District seat on the state Senate.

Katz withdrew a lawsuit challenging Alarcon’s 29-vote victory, and Alarcon has agreed to withdraw a counter-suit against Katz. However, Katz continues to pursue a defamation suit against Sen. Richard Polanco, D-Los Angeles, and Richie Ross, Alarcon’s campaign manager, over a campaign mailer that falsely linked Katz to a 1988 racial incident in Orange County.

Katz also called off a recount which, as it progressed, actually showed Alarcon’s lead increasing to some 33 votes.

Compiled by Dan Turner

Eds: ADDS Calhoun quotes at bottom of story.

LONG BEACH (CNS) – The Boeing Co. today announced that it will open a

“Next-Generation 737” assembly line in Long Beach late this year, and will

move its information and communication systems business unit to Anaheim.

But there was some bad news for the Southland as well in the announcement

from Seattle.

Boeing said it plans to close several labs, including those in Downey, Long

Beach, Palmdale and Canoga Park.

“We are strategically aligning our operations in response to global

business realities. We are reducing costs,” company Chairman Phil Condit said

from the Seattle headquarters.

“The end result is that we are ensuring a stronger, more competitive

company that will be able to provide more opportunities for employees over the

long term.”

Though the actions announced do not include specific employment

reductions, they are included in Boeing’s previous projections, which reduce

its total workforce by 18,000 to 28,000 from the current 238,000 by the end of


That projection also includes portions of the 8,200 job reductions

announced in a similar facilities announcement in March and stated plans to

reduce its Puget Sound, Wash., commercial aircraft production workforce by

12,000 jobs.

“The additional 737 line will supplement capacity in Renton, Washington,

and allow more efficient and productive use of that key final assembly

facility,” Condit said.

“We will begin final assembly of the first Next-Generation 737 in Long

Beach in the fourth quarter of this year. The first few airplanes will be

Boeing Business Jets. Other variants of the aircraft will be added to the Long

Beach workload next year.”

Major parts of the aircraft will still be made in Renton.

By the second quarter next year, the company expects to be assembling three

Next-Generation 737s a month in Long Beach, and eventually up to five a month

— under an agreement it reached with its union in Washington.

The commercial airplane operation in Long Beach, known previously as

Douglas Products Division, is being renamed the Long Beach Division.

Calhoun said Boeing will “stick with the business jet, and what we call

the `convertible model,’ and maybe one other model down there … we haven’t

really decided what that model would be because we need a filler aircraft to

be continuous (in Long Beach) … ”

Gov. Pete Wilson said this “will mean an immediate 600 new jobs for the

Southland, and even more jobs as Boeing builds 1,000 of these aircrafts.

“Boeing didn’t choose us so they could take their lunch breaks at the

beach. They were impressed by our skilled workforce and ability of the state

and the city to work together to produce a winning offer.”

CNS-08-13-1998 16:16

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