AERO­SPACE Northrop job cuts a bad omen

Plants in Re­dondo and El Se­gundo to bear brunt of 500 lay­offs. More are ex­pected.

Los Angeles Times - - Business - Wal­ter Hamil­ton

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-

Northrop,

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.

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