AEROSPACE Northrop job cuts a bad omen
Plants in Redondo and El Segundo to bear brunt of 500 layoffs. More are expected.
In what could be a harbinger of a protracted retrenchment in Southern California’s defense industry, Northrop Grumman Corp. said Monday that it would eliminate 500 jobs in its aerospace division, with most of the cuts expected to hit its sprawling facilities in El Segundo and Redondo Beach.
Century City-based Northrop cited anticipated slowing in Pentagon spending for the cutback, and analysts said further job losses were likely in coming years as the federal government grapples with rising budget deficits.
After several years of heady growth amid one of the biggest military buildups in decades, most analysts are now expecting a long stretch of cuts in weapon purchases. Northrop, the nation’s third-largest defense contractor, is one of the largest private employers in the region.
“Considering the business conditions the company faces there is a high likelihood [of] a series of cuts adding up to thousands of workers by mid-decade,” said Loren Thompson, chief operating officer of the Lexington Institute in Arlington, Va.
“The irony is that Northrop is in better shape than most, but the customer is out of money,” Thompson said, adding that the federal government accounts for 90% of the company’s revenue.
The cutbacks, which will include buyouts and layoffs, primarily will affect employees in support positions such as finance and human relations, and are unrelated to the company’s plan to relocate its headquarters to the Washington, D.C., area, which it announced earlier this year, Northrop said.
Nevertheless, the announcement drew a harsh rebuke from Rep. Jane Har-
man (D-Venice), who said the company assured her that the relocation would not result in layoffs. The two facilities are in her district.
“So news that Northrop will be cutting 500 employees, the ‘result of increased pressure on Department of Defense spending and the need to remain cost competitive,’ perplexes me,” Harman said in a statement.
Northrop has 23,000 people in its aerospace division, about 12,500 of whom work in El Segundo and Redondo Beach. The company makes the center fuselages for the F/A-18 fighter jet in El Segundo and builds satellites in Redondo Beach. Layoff notices will be issued by Oct. 15 and terminations will be effective Dec. 31.
The cutbacks are the latest to hit the aerospace industry amid concerns about the ballooning federal budget deficit.
After growing by double digits every year since the 2001 terrorist attacks, defense spending is expected to rise only about 1% annually over the next five years, Defense Secretary Robert M. Gates said this month.
Lockheed Martin Corp., the nation’s largest defense contractor, said earlier this month that about 25% of its executives opted for a voluntary retirement program designed to cut costs as defense spending slows. More than 600 vice presidents and directors applied for the program offered in July, the Bethesda, Md., company said.
This month, Boeing Co., the second-largest defense contractor, said it was planning to trim its military aircraft business and cut workers as the federal government tightens defense spending and profit margins shrink. The company’s military division makes the C-17 military transport in Long Beach, the F/A-18 fighter jet and the Chinook helicopter.
The Chicago-based company said job cuts would start with 10% of the group’s executives. Boeing didn’t say how many more workers would lose their jobs.
Boeing, which also has a large presence in Southern California with large facilities in El Segundo, Huntington Beach and Seal Beach, had said in July that layoffs were likely because of expected government spending cuts.
HIGH TECH: A Northrop Grumman engineer works on a laser at the company’s Redondo Beach facility.