With the Cold War over, the U.S. defense industry continued remaking itself in 1993, with layoffs continuing at a startling pace - particularly in Southern California.
Analysts say 1994 looks like more of the same."Defense cuts are permanent," Larry J. Kimbell, director of the highly respected UCLA Business Forecasting Project, said - citing the 150,000 aerospace jobs lost by California since 1986. "Those jobs are gone for good."
McKinsey Co. Inc. has estimated California's defense business peaked in 1988 at about $63 billion, or about 20 cents of every dollar spent in the state.
But expenditures fell to $50 billion in 1993 and will likely drop to $33 billion in 1997, analysts project.
"We expect 80,000 more people to lose their jobs in the aerospace industry during the next six years," Kimbell said. "Most of the people who lost these high-paying jobs will not be rehired in aircraft design and production in California before the end of this century."
In post-Cold War 1992, defense companies switched assets and began "consolidating" - that is, getting out of the business.
General Dynamics sold three of its major operations - Cessna Aircraft, missiles and fighter aircraft - while Martin Marietta agreed to buy General Electric's aerospace business, and bankrupt LTV sold off its missile and aerospace units.
The defense industry did not have any comparable deals in 1993 but saw a widespread contraction of business, with at least 30,000 job cuts announced:
- Los Angeles-based Northrop, citing the aircraft industry's slump, disclosed plans to shed 2,400 jobs during 1993 through layoffs and attrition. The company partly attributed the reductions to less work on the 747 civilian jumbo jet and the B-2 military plane.
- Lockheed Corp. eliminated about 9,000 jobs during 1993, with 3,200 positions eliminated at the company's Sunnyvale, Calif., missiles & space division due to federal spending cuts.
- General Motors unit Hughes Aircraft Co. announced plans to close all of its California missile plants by 1994 and cut 6,000 jobs. However, Hughes partly attributed the cutbacks to plans to move some jobs to Arizona, which has lower operating costs.
- The Defense Department put McDonnell Douglas Corp. on a virtual probation due to problems with the C-17 military transport, ordering the company to improve performance or see the program canceled. Some 9,000 people work on the C-17 at McDonnell Douglas' Long Beach, Calif., plant.
McDonnell Douglas also announced plans to cease operations at its Tulsa, Okla., aircraft plant, idling 1,150 employees.
The company likewise reduced work forces by approximately 8,350 people in Southern California; 600 in Mesa, Ariz. and 2,100 in St. Louis and St. Charles, Mo.
- Rockwell International Corp. announced plans to lay off at least 500 employees in its Space Systems division in Downey and Seal Beach, Calif., and cut as many as 900 jobs at its Rocketdyne engine operation in Canoga Park, Calif. The company cited lower federal space-program funding.
- Martin Marietta Corp., which closed a $3 billion deal to buy General Electric Co.'s aircraft electronics division during 1993, announced plans to cut about 9,000 jobs by year's end and nearly 2,000 more in 1994. The cutbacks represented part of a plan to reduce operating costs by $1.5 billion over the next five years.