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McDONNELL DOUGLAS TO CEASE OPERATIONS AT AIR FORCE PLANT IN TULSA

 ST. LOUIS, Dec. 3 /PRNewswire/ -- In response to declining defense and commercial aerospace markets, McDonnell Douglas since 1991 has vacated numerous facilities in Missouri, California, Arizona and Ohio totalling 18 million square feet of space, for a reduction in overall plant size of approximately 30 percent. The corporation has reduced its work force by approximately 60,000 people since mid-1990.
 As part of its continuing plan to consolidate facilities, McDonnell Douglas announced today it will cease operations at Air Force Plant 3 in Tulsa, Okla. The corporation will begin to implement the decision immediately, with cessation of operations scheduled for 1994.
 Approximately 1,150 people are employed at the plant, which is down from a peak of 3,200 in 1990. Workers today received 60 days notification prior to termination in accordance with the WARN Act. McDonnell Douglas will provide outplacement assistance and other services.
 While operations at Air Force Plant 3 will cease, a new McDonnell Douglas modification project for the C-17 Globemaster III military transport will be done in Tulsa. The modification work, which will provide approximately 300 jobs, will be placed at a facility leased to
American Airlines by the Tulsa Airport Authority. McDonnell Douglas intends to sublease a portion of the facility from American Airlines because none of its other facilities can accommodate that work.
 Additionally, the corporation intends to expand employment associated with C-17 crew training to approximately 80 jobs as the work moves from a facility in Norman, Okla., to Altus Air Force Base, Okla., in 1994.
 Over the long term, the decision to cease operations at Air Force Plant 3 will lower McDonnell Douglas' costs and enable it to maintain its competitiveness in an aerospace marketplace where cost pressures have become extreme.
 During 1993, McDonnell Douglas has reduced its work force by approximately 7,750 people in Southern California, 600 in Mesa, Ariz., and 2,100 in St. Louis and St. Charles, Mo. Employment at McDonnell Douglas' Southern California operations will be further reduced before the end of the year by nearly 800 people -- most of whom have already been notified. McDonnell Douglas employs approximately 72,000 people worldwide, down 15,400 from Dec. 31, 1992.
 "This has been a very painful decision for us to make due to the long and positive relationship we have had with the City of Tulsa and the State of Oklahoma, and because of the strong work ethic of the Tulsa work force," said Peter G. Juliano, vice president of production operations for McDonnell Douglas Aerospace-East. "But the combination of the increasingly high cost of operating the plant, the severe overcapacity we face as a result of deep defense cuts and prolonged weakness in the commercial aircraft market meant we had to make a very hard decision."
 McDonnell Douglas uses only 25 percent of the Tulsa facility for the work conducted there on military and commercial aircraft.
 Additionally, McDonnell Douglas officials have said for two years that the future of operations at Air Force Plant 3 would depend over the long term on making a transition from manufacturing and assembly work to other types of aerospace work, such as maintenance and modification.
 "We competed aggressively for a recent F/A-18 maintenance and modification program but, despite our best efforts, lost to a competing bidder," Juliano said. "That meant we had to reassess the situation in Tulsa."
 Approximately 850 of the 1,150 workers at Plant 3 are union employees represented by United Auto Worker Locals 1093 and 73, by International Brotherhood of Electrical Workers Local 584 or United Plant Guard Workers of America Local 800.
 Plans call for the military and commercial work now being done at the Tulsa plant to be moved to other McDonnell Douglas facilities.
 Our Continuing Consolidation
 To All Teammates:
 In response to declining defense and commercial aerospace markets, we have vacated numerous facilities in Missouri, California, Arizona and Ohio totalling 18 million square feet of space since 1991. In addition to vacating facilities, we also have reduced our work force by approximately 60,000 people during the consolidations of the past three years.
 As part of this continuing plan to consolidate facilities, we have reached a very difficult decision to cease operations at Air Force Plant 3 in Tulsa, affecting approximately 1,150 employees there. This decision was made all the more difficult because of the strong work ethic of our Tulsa teammates, the presence we have had for many years in Tulsa, and the support we've received from the City of Tulsa and the entire Oklahoma Congressional delegation.
 The painful decision we're announcing today about our operations in Tulsa is one we have had to make on other occasions as we respond to extremely tough conditions in our industry.
 Unfortunately, deep reductions in U.S. defense procurement continue. Procurement spending has fallen 65 percent in real terms since its peak in 1985. We also are experiencing prolonged weakness in the demand for commercial aircraft. These developments have created substantial excess capacity throughout the aerospace industry and within our company. For example, we use only 25 percent of the available space at the Tulsa plant for the military and commercial work we do there. Taking those factors into consideration, it became impossible to justify the high cost of leasing, operating and maintaining the Tulsa plant.
 Over the past two years, we have told the Tulsa work force that their future would depend on making a transition to new types of work. They would have to change from manufacturing and assembly work to maintenance and modification work. We said the Saudi F-15 order would be important, but was only a first step in making that transition. Winning a long-term F/A-18 maintenance and modification program would be equally critical. We secured the Saudi F-15 order, but the F/A-18 maintenance and modification program went to a competing bidder. As a result of these and other factors, we had to reassess the situation in Tulsa.
 Although we are ceasing operations at Plant 3, we will still maintain a presence in Tulsa and continue to employ some of our teammates through 1994 on a new modification project for the C-17 Globemaster III military transport. The work, which will provide approximately 300 jobs, will be placed at a facility leased to American Airlines by the Tulsa Airport Authority. We intend to sublease a portion of the facility from American Airlines because none of our other facilities can accommodate that work.
 Additionally, we intend to expand employment associated with C-17 crew training to approximately 80 jobs as the work moves from a facility in Norman, Okla., to Altus Air Force Base, Okla., in 1994.
 Consolidation of facilities and the layoffs associated with them are extremely difficult aspects of surviving the serious downturns in military and commercial aerospace. These events have been hard on all of us. I am confident, however, in our resilience and strength, which will enable us to continue adjusting as needed in the short term to maintain our industry leadership in the long term.
 John F. McDonnell
 Chairman and Chief Executive Officer
 -0- 12/3/93
 /CONTACT: Jim Reed, McDonnell Douglas, 314-232-2300, or Lee Whitney, McDonnell Douglas Aerospace in Tulsa, 918-836-6302/


CO: McDonnell Douglas Corp. ST: Missouri, Oklahoma IN: ARO SU:

MF-JB -- LA019 -- 0321 12/03/93 15:27 EST
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