L.A.'s aerospace business - M.I.A.

Lost bid for fighter illustrates local woes

From World War II through the Cold War, big Pentagon orders for aircraft meant jobs in Los Angeles aerospace factories.

But last week's Pentagon decision to direct a groundbreaking, inter-service order for new fighter jets to either Boeing Corp. or Lockheed Martin Corp. ushers in a new era - one in which local aircraft factories can expect only a limited amount of defense work.

"This is a devastating blow," said Michael Beltramo, a former Rand Corp. analyst and author of a 1992 report on the defense industry. "We will probably end up with a lot less work on this one. And this is a big one."

Already, the Los Angeles aircraft manufacturing industry is emaciated. More than 120,000 worked on aircraft factory lines in the county in 1990, but by this year that number had been lopped in half.

The plummeting job rolls, in part, reflect historic shifts that have preempted Los Angeles as the premier defense aircraft manufacturing center.

First, the colossus of the north, Seattle-based Boeing, has re-entered the military aircraft production game in a big way, siphoning work out of Southern California.

And second, under the tutelage of former Georgia Sen. Sam Nunn, chairman of the Senate Armed Services Committee, Bethesda, Md.-based Lockheed shifted much of its production capability to the Southeast, and out of Burbank.

Adding to the mix, McDonnell-Douglas Corp. has shifted substantial production to its St. Louis bases, out of the Los Angeles area where its Douglas Aircraft subsidiary was founded.

And now, in what might be seen someday as the crowning blow to Los Angeles, the Pentagon tapped Boeing and Lockheed to produce separate prototypes of the Joint Strike Fighter, a jet fighter project officially estimated as a $219 billion bonanza.

A team of McDonnell-Douglas and Northrop-Grumman Corp., the latter with large El Segundo production plants, lost out in the selection process.

The projected 3,000-plus jet fighters will be used by all three flying military branches, the Air Force, Navy and Marines. The Pentagon is hoping for economies of scale in production, enhanced by additional sales to allies.

To be sure, some of the early design work, and later subcontracting work, will find its way to Los Angeles.

The Pentagon will fork over $2.2 billion to the two aircraft giants to design and build jet fighter "demonstration planes," to be ready in the year 2001.

At the famed Skunk Works, which moved from Burbank to Palmdale, Lockheed has about 100 employees, mostly engineers, working on the Joint Strike Fighter, and another 800 will be hired, according to company spokesman Jim Stout. Boeing will do its R&D work in Puget Sound.

Plus, there is still hope that production work on the jet fighters will find its way to Los Angeles.

That hope is based on the fact that the aircraft industry is made up of fluid webs of contractors and subcontractors, coming together on a project-by-project basis. Many of those subcontractors are based in Los Angeles.

"There is just a wealth of engineers here with experience in aircraft defense work," said Bob Warnke, director of technical services for the Manhattan Beach-based Chipton-Ross Inc., a labor agency specializing in high-skilled workers. "You can't find these engineers anywhere."

The large aircraft manufacturers have long teamed up on production, taking advantage of each other's strengths.

For example, Century City-based Northrop Grumman has made main fuselage parts for Boeing's famed 747 commercial jet at its plant in El Segundo since the late 1960s.

Northrop also performs heavy subcontracting work on the F/A-18 jet fighter, made by McDonnell Douglas. "We make 40 percent of the F/A-18," said Jim Taft, Northrop spokesman.

And Chatsworth-based Hydro-Mill Inc., somewhat typical of independent subcontractors that dot Los Angeles, manufactures landing struts and fuselage parts for a variety of other larger corporations, including Boeing and Rockwell International Corp.

At El Segundo-based Hughes Aircraft, there is at least anticipation of work on new fighter jets. "We are the world's largest manufacturer of jet fighter radar," said Hughes spokesman Jim Dore.

But actual production on the Joint Strike Fighter jets isn't slated to even begin until 2008, so determining how much of the subcontracting work will flow to Los Angeles is speculative at best.

"It would be premature to say if we will be involved," said Taft, of Northrop. "I am sure as options arise, we will explore them."

In any event, the future of Los Angeles aircraft industry is, at best, murky.

"These contractors survive on a contract-to-contract basis. As one project shuts down, you need to have another one in the pipeline," said Beltramo, the former Rand analyst. "Right now, there aren't enough projects in the pipeline to keep all the contractors going."

Ironically, some say that the shift of aircraft production out of Los Angeles actually reflects that fact the Southern California remains on the cutting edge.

"It is more that Los Angeles has moved on. It was on the leading edge, and remains on the leading edge. The game in military technology today is in electronic systems," said Wolfgang Demisch, an analyst with Bankers Trust Research. "The ability to see (by radar) and actually hit the target is more important than the airplane."

In Southern California, companies such as Rocketdyne, TRW, Hughes, and Boeing (which now owns former electronic divisions of Rockwell International) have electronic manufacturing facilities that lead the nation, said Demisch.

He points out that the new joint strike fighter is not designed as a particularly awesome flying machine. "It is marginally supersonic, and it is designed to land on aircraft carriers. It is the electronics on the plane that count," he said.