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Defense, Aerospace Contractors Shed 5% of OC Workers

Download the 2010 OC’s LARGEST AEROSPACE and DEFENSE CONTRACTORS List (pdf)

An overall industry damper led the 25 largest aerospace and defense contractors here to cut jobs in the past year, according to this week’s Business Journal list.

The companies, which make parts for commercial and military planes and other products, cut workers by 5%, to roughly 24,000, for the 12 months through June.

The list ranks companies based or operating here by Orange County employees. Some entries are listed by their parent companies and then are broken up by subsidiaries operating here.

A commercial aviation slowdown, delays in new planes from Boeing Co. and Airbus SAS, and a shift in military priorities have made for a transition period for aerospace and defense contractors.

Things could have been worse.

Some companies were buoyed by government spending on defense technology, a backlog of orders for new planes and updated technology for existing planes.

No. 1 Chicago-based Boeing, which has operations in Huntington Beach, Anaheim, Irvine, Seal Beach and Cypress, dominates the list with more than a third of the total workers.

Boeing, which is navigating a shift away from the Bush administration’s focus on big war equipment to the Obama administration’s emphasis on cyber warfare, shed 1.2% of its local workforce, or 111 jobs, for 9,100 OC employees.

The decline came from a shift in contracts and baby boomer workers retiring, according to Boeing.

Without Boeing, the 24 other companies saw em-ployment fall 7% to 14,901 workers for the 12 months through June.

Eleven of the companies with operations here saw lower em-ployment. Two were flat. One reported a gain in workers.

Figures for 11 of the companies were Business Journal estimates.

The companywide employment count—which includes workers outside the county—fell 4.5% to 941,877 workers.

Defense contractors braced for the worst last year, fearing the Obama administration would cut military spending. Instead, the administration has maintained spending but shifted priorities.

“If you look closely at the defense budgets, they haven’t gone down dramatically in the past year and next year isn’t targeted to be down significantly either,” said David Reed, president of North American operations at No. 14 Costa Mesa-based Ceradyne Inc., a maker of bulletproof vests.

Spending has shifted away from big-ticket fighter jets to smaller, sophisticated equipment such as satellites, unmanned planes and other vehicles.

Still, pressure to cut costs to combat the federal deficit did impact local operations.

“There is pressure on every segment of the government, military included, to try to look at reducing expenditures given the state of the economy and national debt,” Reed said.

Biggest Cuts

Ceradyne cut local workers 22%, or by 139 people, to 485—the most by percentage and third-largest drop by actual number of workers cut on the list.

No. 8 Alcoa Fastening Systems in Fuller-ton, which makes fastening systems for planes, reported the largest drop in number of workers, going from 1,000 to 800 here.

No. 3 Portland, Ore.-based Precision Castparts Corp. is estimated by the Business Journal as also being down by 200 local workers, for a total of 1,375.

Ceradyne has seen a decrease in orders for bulletproof vests from previous years with less fighting in Iraq and Afghanistan.

“All of the forces deployed worldwide have body armor now,” Reed said. “We’re in a stage of sustainment and replacement now with the military.”

The company still is cutting jobs in its bulletproof vest operations in California and Kentucky. So far, it said it reduced its total headcount 9% to 1,902 companywide.

Ceradyne has been looking to expand into other uses for its chemically made ceramics, such as the solar panel industry.

Boeing

Boeing, the county’s fourth-largest em-ployer in any industry, is shifting its focus away from its most expensive weapons and projects.

Its Brigade Combat Team Modernization program—formerly known as Future Combat Systems—to overhaul the Army’s communications is one of the largest programs here and has been dramatically cut in the current Pentagon budget.

“There is a shift in priorities as we shift from larger vehicles to unmanned vehicles and cyber warfare,” said Nan Bouchard, vice president of program management for Boeing’s Defense, Space and Security in Seal Beach.

Boeing’s local workers primarily are engineers. Nearly all of Boeing’s work done in the county is for the military.

This is the third year in a row Boeing lost jobs. Last year it shed 5% of its local workers.

It is known to see sizable shifts in workers due to its fluctuating contracts.

The company said it had been planning for a flattening of the defense budget and said it would offer less expensive weapons created from existing technology.

Companywide, Boeing was flat at 159,265 workers compared to a year earlier.

Other companies have been beneficiaries of the administration’s changing priorities.

Waltham, Mass.-based No. 8 ThalesRay-theonSystems Co., which has an office in Fullerton, was awarded a $21.8 million contract by the Army to upgrade multiple air defense radar systems this month. This is an extension of an existing contract awarded in 2007.

The company is upgrading radar transmitters, receivers and exciters to increase their capabilities to detect smaller targets at greater ranges. The upgrade work is being performed in its Texas and Fullerton operations.

No. 2 Parker Aerospace in Irvine was estimated flat at 1,800 workers.

The operation is part of Cleveland- based Parker Hannifin Corp.’s air and fuel division, which makes parts for fueling systems on jets.

Several companies on the list are awaiting full-scale production of Boeing’s 787 Dreamliner.

As of April, more than 50 commercial airlines and other customers put in orders for the Dreamliner, which has seen manufacturing delays and other problems that have pushed back delivery by several years.

Other airlines are seeking to compete with the Dreamliner by updating their existing fleets with new technology.

“Airlines are doing retrofits on many of their older fleet in line with their upgrades on new planes slated for service so that the passenger experience is the same across the board,” said Lori Krans, vice president of communication at No. 10 Thales Avionics Inc. of Irvine.

Thales, which does electronic systems for planes, saw its workforce drop 13% to 650 workers as many customers held back on fancier upgrades during the worst of the recession.

The company, whose parent company is France’s Thales, has seen business pick up abroad for its in-flight entertainment and communication systems.

It landed a contract with Qatar Airways Co. to install in-flight systems on the airline’s fleet of 30 Boeing 787s.

The company also was contracted to retrofit 18 Boeing 777 planes with in-flight entertainment for British Airways PLC.

No. 6 Rockwell Collins Inc. of Tustin was the only company to add local workers, bringing on 13 workers for a total 1,050. The company, whose headquarters is in Cedar Rapids, Iowa, makes aircraft cabin controls and cockpit parts.

The company won a $208.9 million contract in April to upgrade aircraft communications gear for the vice president, congressional leaders and other high-ranking government personnel in as many as 40 planes.

No. 7 Panasonic Avionics Corp. in Lake Forest, a direct competitor of Rockwell Collins, remained flat at 1,022 workers.

The company, part of Japan’s Panasonic Corp., has seen a slate of contract wins recently including deals with New Zealand’s Air New Zealand Ltd., Hong Kong’s Hong Kong Airlines and Britain’s Virgin Atlantic Airways Ltd.

Download the 2010 OC’s LARGEST AEROSPACE and DEFENSE CONTRACTORS List (pdf)

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