Aerospace woes overtake Los Angeles 'job shops'.

Aerospace woes overtake Los Angeles `job shops'

Hundreds, maybe thousands of small "job shops" in the Los Angeles area that employ anywhere from a handful to 200 or 300 workers, have been economically damaged by the cutbacks in the defense and aerospace industries.

Dozens, perhaps hundreds, of workers may have lost their jobs so far and many more of the job shops may be teetering on the brink of bankruptcy or going out of business, people who work in the shops said.

And the prognosis for the small shops is not bright:

Industry officials said they expect the hard times to continue well into next year and possibly into 1992.

"It's a very serious situation and I'm pessimistic about the future," said Barry Baszile, owner of Baszile Metal Service in Los Angeles and a member of the board of directors of the Los Angeles Chamber of Commerce.

Baszile employs 32 people and has been supplying large defense industry companies with zinc, cooper and nickel parts since 1975.

"We have been luckier than other companies because this is a minority-owned company, which has helped us get jobs. Other companies are having a rough time, though, and it could be some time before it gets better," he said. "Many of us are looking for new markets. I just got a contract with the U.S. Mint that I have been working on for three years. It's not a big contract but it's a start."

Throughout the Los Angeles area, small companies, referred to as job shops, produce parts for the large defense and aerospace companies like Lockheed, Northrop, McDonnell Douglas and Hughes that have manufacturing facilities in the region.

There are no exact figures on how many job shops there are in the area but people in the industry said there are probably several thousand such companies.

Over the last two years, and particularly during the past year, the big contractors in Los Angeles have laid off thousands of workers because of cuts in government spending and the completion of major projects. Further cuts at the large companies are likely, industry analysts have said.

Jerry Stump, president of the San Fernando Valley chapter of the National Tooling & Machining Association, a trade group that represents many of the companies, said no one knows for sure how many shops have closed but that an estimate of 10 percent "is probably a little too high."

"I would say the recession of the early 1970s and early 1980s were worse times for our business but right now I don't know how long this is going to last. It could last a long time and if it does, this could be the worst," said Stump. He is general manager of Lucas Machine Co. in North Hollywood, a company that has been producing small metal parts for aerospace firms since 1953. It currently has 10 employees.

"Our company is more involved with commercial aircraft manufacturing rather than defense but we have noticed much more competition because shops that were in defense are now looking for new customers," said Stump.

"I've been in the business for 35 years and there have always been valleys. We are definitely in one now. There are a lot of auctions going on for equipment from shops that have closed down," he said.

The San Fernando chapter of the Tooling & Machining Association has 60 members and the Los Angeles chapter has more than 200, said its treasurer, Phil McCullough, vice president of Fibrefoam Electronics in Huntington Beach.

"Companies have closed. Many of my competitors have gone by the wayside because of acquisitions or business failures during the past year," said McCullough.

"It's a serious situation but, even though it's hard to say, the crisis in the Middle East may keep a lot of us going and if a war breaks out, our situation can turn around pretty fast. A war could keep many of us going longer."

An executive with a subcontracting firm with about 60 employees who did not want to be identified, said, "We have been in a period of contraction for the past year-and-a-half; our workload has been shrinking. There have been substantially more business failures among the small companies that are undercapitalized and cannot withstand any downturn."

The source said since the big defense contractors started the cutbacks, they have begun doing more of the work in-house that was previously done by the small job shops.

"They (the big defense and aerospace companies) have been reducing their vendor base and what we have to do is convince them that it is still economical for them to use subcontractors," he said.

McCullough and others said shops are looking for new markets, like medical and health care fields. "The ones that are still around, if they want to stay around, will have to concentrate on sales and marketing," McCullough said.

Ken Chrenow, president of J.E. Fowler and Associates, an executive search firm in Burbank that specializes in the defense and aerospace industries, said there has been a significant increase in the number of people who have worked at job shops looking for new careers in other industries.

"It started about 18 months ago or two years ago, more people looking for new jobs, or at least looking to see what's out there. There is a lot of uncertainty and it could last for some time," said Chrenow.