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Rocketdyne Awaiting Decision on Programs : Aerospace: Concerns about funding for two key projects contribute to cloudy future for major Valley employer.

April 06, 1993|JAMES F. PELTZ | TIMES STAFF WRITER

Two of Rocketdyne's key programs are the proposed Space Station Freedom and the National Aero-Space Plane (NASP), but because those two projects are still on the ground, the future of the Valley's biggest aerospace employer is up in the air.

Clinton Administration and Pentagon officials are indicating that they want both projects sharply reduced, and that could crimp the size of Rocketdyne's contracts and, perhaps, the size of its work force.

Rocketdyne is the Canoga Park-based unit of Rockwell International Corp. that primarily builds rocket engines for the space shuttle and for the Atlas and Delta rockets that launch commercial and military payloads into space.

The company is also leading a team (that includes Lockheed Corp.) in designing a solar-based electrical power system for the space station, which would be used for research and as a base station for space exploration.

And Rocketdyne (with United Technologies Corp.'s Pratt & Whitney unit) is developing engines for the NASP, a proposed hypersonic plane that could vault from a runway into Earth orbit and cross continents in an hour or two.

Although Rocketdyne does not break down its numbers, the space station is much more important to the company than the NASP. It's believed Rocketdyne currently derives about $260 million in annual revenue from the space station, but only $30 million from the NASP, so together they account for about 29% of Rocketdyne's annual revenue of $1 billion. Shuttle-engine work continues to account for about 38%.

Rocketdyne employs about 7,000 people, including 6,000 in the San Fernando Valley. The company is the largest aerospace employer in the Valley, a title held by Lockheed until it shifted thousands of workers from Burbank to Palmdale and Georgia during the past two years. Lockheed still has roughly 3,000 workers in the area, including its headquarters staff in Calabasas.

Although Rocketdyne itself has pared its local work force from about 8,800 in 1989, it also remains one of the region's largest private employers overall, and the company estimates that its presence pumps $380 million into the San Fernando Valley's economy each year.

But talk of cutting the space station and NASP projects, which require about 1,100 and 100 of Rocketdyne's workers, respectively, raises the question of whether Rocketdyne might be forced to pare its local employment even further.

Wolfgang Demisch, a veteran aerospace analyst with the firm UBS Securities in New York, said it's "unlikely but not inconceivable" that the space station could be scrapped altogether, which obviously would hurt Rocketdyne.

Major cutbacks in the space station's budget are more likely, which makes it hard to predict how Rocketdyne will be affected because the changes would require "an extensive redesign of the power supply Rockwell has put together," Demisch said. The impact on Rocketdyne could be lessened, he said, if the National Aeronautics and Space Administration relied on Rocketdyne to redesign a lower-cost power system.

Either way, the mere possibility of layoffs sends a shudder through the Valley, because there have already been so many other cuts in local aerospace and defense employment. The most recent blow was a week ago, when Hughes Aircraft Co. said it planned to close its Canoga Park missile-design plant, where 1,900 people work, and shift the operation to Tucson.

Rocketdyne is also understandably sensitive these days. Its president, Robert D. Paster, declined to speculate on the company's future or otherwise be interviewed until President Clinton submits his proposed federal budget to Congress--a budget that will better indicate the White House's interest in space-related funding.

There's speculation Clinton will unveil the budget as early as this week, although the White House said Monday that no date has been set.

In the meantime, Rocketdyne has pressed ahead. As part of its space-station effort, the company--joined by Gov. Pete Wilson--held a big party last month to celebrate a new $15-million facility in Canoga Park that will be used for the station's work.

But behind the festivities was the unshakable fact that Washington's plans for the station and the NASP call for scaling back both projects. In the case of the space station, President Clinton wants to reduce funding for the project to keep money free for pursuing other technologies, NASA's chief administrator Daniel S. Goldin said last month.

Goldin said Clinton not only wants a "significant" cut in the project's $30-billion development cost, but also wants to reduce by half the long-term operational costs of the station, which have been estimated at between $60 billion and $118 billion over 30 years. (Congress authorized $2.1 billion to be spent in the current fiscal year alone.)

The cuts would demand a redesign of the space station, and an independent advisory team is expected to review proposals and make recommendations to the President by June 1.

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