More tailspins on the horizon for Southland aerospace companies.

More tailspins on the horizon for Southland aerospace companies

"It's going to be pretty grim!"

This sums up the 1991 job outlook at the giant aerospace industry here, Los Angeles County's largest manufacturing employer, declared Jack Kyser. Neither commercial airplane nor space manufacturing activity will offset nosediving defense business, lamented the Los Angeles Area Chamber of Commerce's chief economist.

He gloomily projected L.A. aerospace employment will average 245,000 jobs in 1991 -- down a sickening 15,700 from 1990's average aerospace employment here, estimated at 260,700. That 1990 figure, Kyser noted, plummeted 15,000 from 1989, which dipped 5,400 from 1988, and '88 slipped 7,900 from 1987.

In short, L.A. aerospace employment has been in a downturn since peaking at 291,000 in July 1987, Kyser said. Aerospace, which then accounted for 31.9 percent of all manufacturing employment in the county and 7.2 percent of total nonagricultural employment, he projected, will average but 28.6 percent and 5.6 percent, respectively, in '91.

But an even steeper tailspin could be in the offing after this year, chimed in a local financial analyst. Aerospace job cuts in 1990 occurred in an industry with a $260 billion backlog of defense orders, he reminded, with the money already appropriated by Congress.

Only since the Cold War peace broke out early last year have real budget cuts for defense hardware begun to be made, it may be observed. Unless Communist hardliners regain control of the Kremlin, Kyser said, far deeper defense cuts are likely than Defense Secretary Richard B. Cheney's five-year plan to trim the Air Force to 28 wings from 36, the Navy to 450 ships from 600.

Given the ending of the East-West confrontation, "it's a different environment," agreed Wolfgang H. Demisch, U.S. director of equity research at UBS Securities Inc., in New York. "The United States will have to find its role in that environment."

Demisch went so far as to mention the possibility the U.S. may revert to the sort of "small peacetime army" the nation had before World War II. Such a decline in Cold War spending risks a "severe slump" for aerospace, he remarked.

"Yet if the U.S. hangs up its star as world sheriff, it could create opportunities for export of U.S.-style six-shooters," Demisch added, "because there are lots of bad people out there. It could be a world of buoyant arms sales."

Asked what arms might be exported most easily, he replied: tactical electronics, tactical missiles, tactical missile platforms.

Among local beneficiaries of this scenario, he said, could be: General Dynamics Corp.'s tactical missile plant in Pomona; L.A.-based Hughes Aircraft Co., which makes tactical missiles, radar, navigation gear; Beverly Hills-based Litton Industries Inc., which makes electronic warfare gear.

Although citing "substantial opportunities" in all these areas, Demisch also pointed to "vigorous competition" in them. Moreover, he cautioned, there may be "long delays" before U.S. defense contractors can sell their wares internationally.

Acknowledging there will be "pains in international trade," the chamber's Kyser said the Los Angeles County Economic Development Corp.'s Aerospace Task Force is trying to develop overseas markets. The organization also is trying to establish a program to train and retrain laid-off aerospace employees, he said.

To be sure, nobody expects the nation to denude its defense arsenal. After all, said Demisch at UBS Securities, there still are "murderous dictators in Asia and Africa."

Thus, he predicted, "demand will grow for some sort of missile defense," such as the Strategic Defense Initiative, more popularly called "Star Wars."

In making that prediction, Demisch indicated he was thinking of such militant dictators as Libya's Moammar Kadaffi, who has supported international terrorism, and Iraq's Saddam Hussein, who invaded Kuwait Aug. 2.

The invasion of Kuwait and the U.S. response, Operation Desert Shield, both to protect Saudi Arabia's oil fields from a further Hussein advance and to drive him from Kuwait, are likely to cast long shadows to L.A. from the Persian Gulf. The future of both the B-2 Advanced Technology (stealth) Bomber and the Advanced Tactical Fighter well may depend on how stealth technology performs in Iraq, Demisch asserted.

(A primary objective of the largely unproved stealth technology is to enable aircraft to avoid detection by enemy radar and thereby defeat modern radar-controlled air defense systems deployed around the globe. The Soviet Union, alone, exported more than 30,000 surface-to-air missiles to third-world countries in the last decade, not including smaller, shoulder-launched, anti-aircraft missiles.)

The "stealthified" Advanced Tactical Fighter and B-2, of course, are two of the three major Air Force aircraft programs that will have particularly great impact -- positive or negative -- on the future of L.A.'s aerospace industry.

Century City-based Northrop Corp. has been test-flying two B-2 bombers and is assembling more in Palmdale. However, continuing attacks in Congress about the program's huge cost have forced the B-2 production schedule to be scaled back, and whether more than 15 B-2s ever will be built hangs in the balance.

The uncertainty is worrisome for Northrop. It is heavily reliant on the B-2 for the majority of company sales, explained Lawrence M. Harris, senior aerospace analyst at Bateman Eichler, Hill Richards Inc., L.A.-based securities brokerage house.

Northrop and Calabasas-based Lockheed Corp. head the two teams vying for award of the Advanced Tactical Fighter program. Lockheed is teamed with Seattle-based Boeing Co. and St. Louis-based General Dynamics Corp. on the YF-22 while Northrop is teamed with St. Louis-based McDonnell Douglas Corp. on the YF-23.

Each team built two prototypes here for flight testing. Results of those tests, completed late last year, were given in December to the Air Force, and it is scheduled to select in April either Lockheed's YF-22 or Northrop's YF-23 to go into full-scale development.

However, the selection may be delayed until summer or even fall, Harris said. Moreover, UBS Securities' Demisch said, the decision probably is two years away as to whether to order the Advanced Tactical Fighter into production.

The Air Force has said it wants 750 of the aircraft to replace McDonnell's F-15 Eagle, the nation's front-line air superiority fighter, and the Navy has indicated interest in several hundred more ATFs if it goes into production.

If Northrop wins the nod, the YF-23 is expected to be assembled in Palmdale. If Lockheed wins, though, its management previously announced, assembly will be in Marietta, Ga., home state of Democrat Sam Nunn, chairman of the U.S. Senate's Armed Forces Committee.

(California currently lacks any defense champion in the Senate. Republican Pete Wilson was elected the state's new governor, and Democrat Alan Cranston, currently mired in a Senate ethics investigation for being one of the "Keating Five," long has been a foe of defense spending.)

The third major Air Force airplane program, whose future will greatly affect L.A.'s aerospace industry -- for better or worse -- is the C-17 cargo jet being built by Douglas Aircraft Co. in Long Beach. Although the $30 billion program has been plagued by cost overruns and production schedule snafus, Douglas completed assembly of the first C-17 in late December.

That met a revised Air Force deadline, clearing the way for award of a new production contract for four more of the transports even though the first C-17 is not scheduled to fly until June with delivery slated a year later. Since the aircraft is designed to transport large military payloads to front-line troops, Operation Desert Shield's final outcome could have a positive impact on the C-17's future, observed Bateman's Harris.

Since F-117A Stealth Fighters may be used over the desert sands in the Middle East if fighting breaks out between the U.S. and Iraq, that aircraft could be ordered back into production, he said. Lockheed, which built the final one in July, delivered a total of 59 Stealth Fighters from the company's hush-hush Skunk Works in Burbank, Harris recalled.

General Dynamics' Pomona plant and Hughes Aircraft also could benefit from Operation Desert Shield, he said, if certain of their tactical missiles have their production rates accelerated by an Iraqi-U.S. war.

Harris mentioned as possible examples: GD's Stinger ground-to-air missile and Sparrow air-to-air missile; Hughes's Phoenix air-to-air missile, TOW antitank missile and Maverick air-to-ground missile that otherwise is scheduled to go out of production in a couple years.

The largest defense program at Hughes, he said, is the Amraam air-to-air missile. The Air Force recently began acceptance of the Amraam, Harris said, and it should be a growing program.

However, Hughes is making a transition from military to commercial business, he emphasized, and is expanding the company's presence especially in communications.

Although Litton's naval warship construction business is doing well with a four-year backlog, Harris said, the company's focus, too, will be on commercial products -- such as industrial automation. Profits will be "up significantly," he added.

Among local aerospace companies, though, El Segundo-based Rockwell International Corp. "looks the healthiest, has the best balance sheet," Harris reported, with "low debt to equity and good cash flow." But Rockwell's aerospace revenues will decline, he continued, for the company has no major airplane production program -- even on the far horizon -- and so is focusing more on space, electronics and commercial work.

The company is continuing to make spare parts for the 100 B-1B strategic bombers that Rockwell previously produced. But the other two airplane programs on which Rockwell is working are "experimental" -- meaning research for cutting-edge aircraft technology -- and so unlikely to go into production, Harris indicated:

The X-31, an "enhanced maneuverable experimental fighter that uses thrust vectoring," is undergoing final assembly in Palmdale for delivery early this year to the National Aeronautics & Space Administration. Rockwell is teamed with a German company on the X-31, Harris said.

The National Aero-Space Plane, a joint project of NASA and the Air Force already approved by Congress to develop a manned airplane that will fly from L.A. to Tokyo in an hour, has Rockwell as the team leader. Other NASP team members are General Dynamics, McDonnell Douglas, United Technology Corp.'s Pratt & Whitney division and Rockwell's Canoga Park-based Rocketdyne division.

Pratt & Whitney and Rocketdyne are developing an advanced propulsion system for NASP, and the next decision whether to move ahead with the program is scheduled to be made in 1993. NASP's propulsion system is to be the next quantum jump in propulsion to hypersonic speeds of 10, 15 or more times the speed of sound from current supersonic speeds of two to three times the speed of sound, said Robert D. Paster.

As president of Rocketdyne, he heads one of the brighter stars in L.A.'s aerospace universe. Although the division's Southern California employment slipped to 7,895 in 1990 from 8,375 the prior year, employment will be stable in 1991, Paster forecast, with perhaps some minor reduction through attrition.

Besides NASP propulsion, he said, Rocketdyne is working on a passel of both military and civilian programs. Among the former, Paster said, Rocketdyne continues to produce rocket engines for 12 Peacekeeper intercontinental ballistic missiles a year and to support Strategic Defense Initiative with launch and laser technology.

Civilian space programs, though, account for "80 percent of our work," Paster said. Rocketdyne, for example, continues to overhaul Space Shuttle main engines for NASA while producing new engines for Endeavor, the shuttle to replace Challenger that exploded during its disastrous launch Jan. 28, 1986.

(Another Rockwell division is scheduled to complete assembly of Endeavor by mid-year in Palmdale.)

Rocketdyne also continues to produce rocket engines for the Atlas and Delta Expendable Launch Vehicles for hoisting a variety of satellites into orbit around Earth. The division just got orders from McDonnell Douglas for 15 more rocket engines through 1993 for Deltas, Paster said, so a launch a month can be achieved into the foreseeable future.

Meanwhile, he said, Rocketdyne has a contract into 1993-94 from General Dynamics for 61 rocket engines for Atlas launch vehicles. Although Atlas is a derivation of the Atlas intercontinental ballistic missile and Delta a derivation of the Thor intermediate-range ballistic missile of the 1950s, all rocket engines have been brand new since 1990 for the ELVs.

Paster also expressed optimism the U.S. government's Heavy Launch Vehicle program will be revived. The HLV initially would be flown with Rockwell's Space Shuttle main engines, he said, but improved rocket engines may be used later on a freighter to resupply NASA's planned Space Station and to go to Mars.

Rockwell has the contract, too, to produce the 75-kilowatt power system aboard the Space Station, a much delayed, revised, stretched-out and down-sized program. After again cutting back NASA's Space Station program, Congress is looking for a new proposal this month or next, Paster said.

Initially, he said, the Space Station was to be manned in orbit in 1997. But now it looks like the Space Station will be "man-attended" in 1996 and "fully-manned" in 1999, he said.

For Rocketdyne, Paster continued, the revised program means the planned power plant won't be fully installed in the Space Station until 1999, rather than 1997. However, the man-attended stage will have one-fourth the ultimate 75 kilowatts of power, he said, meaning employment on the project at Rocketdyne will be stretched over a greater number of years.

Less far out, though, commercial airplanes represent a "still fundamentally robust" business for the aerospace industry, said UBS Securities' Demisch: Some 900 older and less efficient airliners need to be replaced over the next dozen years.

PHOTO : Gambling millions to make billions: Lockheed's rendition of the Advanced Tactical Fighter

PHOTO : Northrop prototypes of the Advanced Tactical Fighter: Air Force will award contract by July 1