Aerospace flees L.A. for friendlier cities.

Aerospace Exodus

Major L.A.-area operations that recently relocated.

Company/              Former           Moved               Year
Division              Site             To                  Moved

Lockheed/
aeronautics           Burbank          Marietta, Ga.       1992

Lockheed/
HQ                    Calabasas        Bethesda, Md.       1995

Lockheed Martin/
weapon-system         Glendale         Mannasas, Va.       1996

Hughes Aircraft/
HQ                    L.A.             Alexandria, Va.     1995

Hughes Electronics/
missiles systems      Canoga Park      Tucson              1994

Northrop Grumman/
navigation            Hawthorne        Illinois            1997

Sources: Lockheed Martin Corp., Hughes Electronics Corp. and
Northrop Grumman Corp.

Seattle and Los Angeles - when it comes to aerospace, it really is a tale of two cities. While L.A.'s aerospace giants have uprooted their local operations, moving them primarily to smaller, lower-cost locales across the country, Boeing Co. has remained firmly ensconced in Seattle.

Boeing has remained "an integral part" of Seattle's business community for more than 80 years, said Peter Conte, a spokesman for the aerospace and defense contractor. He said that Boeing has never "seriously" considered vacating its Puget Sound headquarters or transferring its current operations from Seattle.

"It just wouldn't happen," he said, noting that Boeing owns 45 million square feet of space and employs 97,000 people in the Puget Sound area.

Not long ago, some would have said the same about Hughes Aircraft Co., which once owned and leased more than 10 million square feet of offices and factories in Los Angeles. But now the aerospace and defense units of the modem-day Hughes Electronics are scattered across the country:

Its aircraft division headquarters are in Virginia, its missiles systems are in Arizona and its defense manufacturing sites are in small, obscure towns such as Forest, Miss.; Orangeburg, S.C.; and La Grange, Ga.

There was no unifying reason that each of these divisions left the Golden State, company spokespeople said. Among the factors that contributed to the exodus were the post-Cold War mergers and consolidations, California's high cost of living and a desire to be closer to customers in the federal government, they said.

In short, California was not the most efficient place to conduct business.

"It's safe to say that our moves have been motivated by our need to stay at our most competitive," said Marcy Garber, a spokeswoman at Hughes Electronics. She also cited the state's expensive labor force and complicated permitting processes.

Dave Shey, a spokesman for Hughes Electronics, said Hughes transferred its missiles systems unit from Canoga Park, Palmdale and Rancho Cucamunga to Tucson, Ariz., after it acquired General Dynamic's missiles systems "in order to better consolidate our operations."

Why not consolidate in California?

"(Tuscon offered) a combination of the physical facilities and Arizona's good business climate," Shey said, noting that the state legislature offered the company generous tax incentives.

Chip Manor, spokesman for Lockheed Martin Corp., said it "made sense" for the company to shift its headquarters from Calabasas to the Washington, D.C. suburb of Bethesda, Md., when it merged with Martin Marietta.

Costs were also an issue, especially with regard to its expansive manufacturing operations in Burbank.

"At the time Lockheed first went into Burbank, it was just a vacant place," Manor said. "But the city grew up around it and squeezed the plant so there was no more room for expansion."

So the company relocated all its aeronautical manufacturing operations from Burbank to Marietta, Ga. in 1992.

Conte, the Boeing spokesman, said costs and growth issues have never been a significant problem for the company in Washington state. He noted that Boeing has always paid its employees "at the market rate" for the Seattle area, which is below the market rate in California.

As far as dealing with government bureaucracy, Conte said, "Let's just say that if the CEO of Boeing called the mayor of Seattle or even the governor about a permitting problem, they'd definitely take his call."

Boeing certainly didn't survive the post-Cold War contractions unscathed. It cut nearly one-third of its work force, from a high of 104,515 in 1990 to 71,834 in 1993.

While the downsizing in Seattle was indeed dramatic, the one in California was even worse. The state had 28 percent of the nation's aerospace industry but suffered 40 percent of the cutbacks, said Alexis B. Allen, a spokeswoman for the Aerospace Industries Association.

Manor said that Lockheed Martin plants in 22 other states suffered downsizing too, and that they are representative - albeit on smaller scales - of what happened to California's aerospace industry since the end of the Cold War.

Representatives of Lockheed Martin and Hughes are quick to point out that those companies still retain a significant presence in California. Hughes' employs 28,000 in Southern California, and more than half - 15,000 - of those work at Hughes' El Segundo-based satellite operations. Lockheed Martin has more workers in California than in any other state.

However, its only large Southern California operations are the "Skunk Works" design center in Palmdale and aircraft maintenance plant in Ontario. The space and satellite groups are in the Bay Area city of Sunnyvale.

Mitch Zack, spokesman for the California Trade and Commerce Agency, said Lockheed Martin's Palmdale operations symbolize a reversal in California's aerospace industry's recent poor fortunes.

California government officials assisted Lockheed in competing for a $960 million NASA contract that would bring substantial, long-term work to Skunk Works. Lockheed was competing against other contractors' facilities in New Mexico and Florida for the job of building a demonstrator X-33, a vehicle intended as the successor to the space shuttle.

The California state and local officials formed an ad hoc "red team" to help Lockheed win the project. The team and Lockheed touted California's traditional strengths - its infrastructure and skilled labor pool - to successfully win the contract, Zack said.

"We know L.A. has significant cost issues," he said. "But if you look at the benefits and resources, they far outweigh the disadvantages. We just need to make that clear."