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Rockwell Section to Subcontract Data Processing : Aerospace: Outsourcing will mean 70 layoffs at the Seal Beach headquarters. The aim is to cut space shuttle program costs.

March 22, 1994|DEAN TAKAHASHI | TIMES STAFF WRITER

SANTA ANA — Rockwell's space systems division will subcontract its data processing to an Orange County computer maintenance company in a move that will mean at least 70 layoffs at Rockwell's headquarters in Seal Beach.

The move, known as outsourcing because it turns an internal company process over to an outside source, will also result in limited hiring at Santa Ana-based Software Maintenance Specialists, which generated about $10 million in revenue last year operating computer systems for a variety of corporations.

This contract represents the first time that Rockwell has chosen to use an outside contractor for computer processing at one of its divisions. The aim is to cut costs for the space shuttle program, for which Rockwell is a prime contractor.

"We're seeing a trend of outsourcing as American businesses downsize," said Mike Winder, president of SMS. "Like any other industry, the aerospace industry is under pressure to cut its costs."

Janet Dean, spokeswoman for Rockwell, estimated that 70 to 100 people in Rockwell's corporate information unit would be laid off. She said 70 is the likely figure.

Winder estimated that SMS would hire 15% to 20% of the laid-off Rockwell employees. At $8 million to $12 million over the first two years, the Rockwell contract is the biggest that SMS has won.

But the company has not had as much luck penetrating the rest of the defense industry, because some companies believe they must keep classified data in-house for security reasons, Winder said.

"That is beginning to change as fewer things are considered classified," Winder said.

SMS will provide data processing services for all engineering and logistics data that Rockwell keeps on its mainframe computer system.

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