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Northrop Will Slash 2,400 Jobs : Aerospace: Most of the cuts will hit California. Company cites Boeing's 747 cutbacks and declining B-2 development work.

March 10, 1993|NANCY RIVERA BROOKS | TIMES STAFF WRITER

Taking a bigger hit than expected from Boeing's recently announced aircraft production slowdown, Northrop Corp. said Tuesday that it will eliminate about 2,400 more jobs this year--nearly all in Southern California.

The Los Angeles-based aerospace company blamed the job cuts--about 7% of its total work force--on Boeing's plans to slash production of its 747 jetliner by 40% in 1994 as well as declining development work on the B-2 Stealth bomber. Northrop builds fuselages for the 747.

About 1,700 people will be laid off and another 700 jobs will be eliminated through attrition, according to Northrop spokesman Jim Hart.

Northrop already has reduced its work force this year by 600--about half through layoffs and the rest through attrition. Northrop employs 33,000 people, down 31.5% from a peak of 48,200 in early 1988.

"Reducing our work force is always a painful process because of the impact on people's lives," said Kent Kresa, Northrop's chairman, president and chief executive.

Only last month, Northrop said that it expected to lay off about 200 people because of Boeing's production slowdown.

On Tuesday, however, Northrop said its Hawthorne-based aircraft division, which employs 10,300 people, would cut employment by 1,300 during 1993. About 1,200 of those will be related to the 747 slowdown. The total would have been higher, but the division added about 300 jobs to the development program for an advanced version of the F/A-18 Hornet jet fighter.

The 747 job cuts increased substantially because Northrop officials realized that the slowdown would hit the company sooner than expected, Hart said. Northrop is not ruling out the possibility of more layoffs later, he said.

Aerospace analyst Paul Nisbet speculated that Boeing, in an attempt to improve its cash flow, advised subcontractors to slow delivery of supplies earlier than expected.

Boeing's move was another blow to many aerospace companies that had sought commercial work to balance dwindling defense contracts, only to see the airline business brutalized by sluggish air travel and ruinous fare wars. Southern California is Boeing's largest source of parts in the United States.

"It's not a pretty time for the aerospace industry," said Nisbet, who heads JSA Research, an independent aerospace research firm in Newport, R.I. In addition to the lagging commercial aircraft business, "we're seeing increased cuts to the defense budget, much more than we anticipated three months ago, or even three weeks ago."

Analyst Wolfgang Demisch estimated that Northrop eventually will cut about 2,000 jobs because of the Boeing production slowdown.

"I don't view this as particularly happy news, but it's not particularly surprising," said Demisch, an analyst with UBS Securities. Between the problems of commercial airlines and defense cuts, "I think there's a ways before happy days are here again."

Northrop also said it would reduce its B-2 work force by 500 people.

Northrop's B-2 division employs 12,300 people at plants in Pico Rivera and Palmdale.

Another 300 jobs would be cut at its electronics systems division, which employs 5,750 in Hawthorne; Rolling Meadows, Ill. and Norwood, Mass. Northrop's Information Services Center also expects to eliminate 300 jobs.

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