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Boeing to Close Historic Anaheim Facility

It will relocate 3,700 jobs to Huntington Beach in an effort to streamline its defense operations.

July 22, 2006|Martin Zimmerman, Roger Vincent and Mai Tran | Times Staff Writers

Boeing Co. will shutter its historic Anaheim defense facility and shift the operation's 3,700 jobs to Huntington Beach over the next four years, the aerospace giant said Friday.

The facility, Anaheim's second-biggest employer after Disneyland, was the birthplace of the guidance systems for the world's first nuclear submarine and developed components for the manned space program. It boasted 36,000 workers at its Cold War peak.

No layoffs are planned in connection with the move, part of Boeing's previously announced plan to streamline its Southern California defense businesses. Boeing, the world's largest aerospace company, is trying to cut costs as it competes for Pentagon contracts amid a slowdown in spending.

"Our goal is to reduce our overhead costs and flow [those savings] down to our customers," Boeing spokeswoman Kari Kelley said.

Most of the workers at the 103-acre facility are engineers performing research and development work on defense programs, including missile and submarine guidance systems and the so-called Integrated Battlespace initiative, an attempt to develop technologies to coordinate battlefield communications among U.S. armed forces.

Boeing's Huntington Beach facility employs about 6,500 and is home to half a dozen defense and civil space programs, as well as advanced research and development. The workers from Anaheim will move into existing facilities.

For Anaheim, the loss of the Boeing payroll hurts, but it also creates opportunity.

"We are saddened by the loss of a major corporation such as Boeing, but this does give us a tremendous opportunity in a developing part of our city to seek new businesses once Boeing has vacated," Anaheim spokesman John Nicoletti said.

The parcel lies in Anaheim Canyon, the largest industrial district in Orange County at 2,600 acres. City planners hope that the new occupants of the site will be employers in high-tech or light-manufacturing businesses, Planning Director Sheri Vander Dussen said.

"Housing is not on the table right now," she added.

Anaheim will lose about 2 million square feet of industrial space to residential development near Angel Stadium in coming months. So the value of the Boeing property -- now consisting mostly of office space and laboratories -- is growing, said real estate broker Jeff Chiate of Cushman & Wakefield.

Among those needing facilities in the area are manufacturing and distribution businesses that serve local markets, he said. Also prowling for industrial space are companies that do business through the ports of Los Angeles and Long Beach, as well as tile retailers concentrated on State College Boulevard.

Industrial vacancy in Anaheim is at a record low 2.3%, down from 3.6% a year ago, according to Cushman & Wakefield.

Boeing has begun an environmental study to see whether the Anaheim land is free of contaminants, said Stephen Davis of the company's real estate subsidiary. Pollution has marred other former aerospace manufacturing sites that have been redeveloped in Southern California.

The overall effect of the move on the local economy is expected to be minor -- certainly not on par with the aerospace plant closings of the early 1990s, when jobs evaporated by the thousands across the region.

"It's not good news for Anaheim, but for the economy as a whole the impact will be minimal," said Esmael Adibi, an economist at Chapman University in Orange.

He noted, however, that some spending by the facility's workforce would shift from one city to another -- and that worries owners of nearby mom-and-pop restaurants.

"It's going to be terrible for our business that they're all leaving," said Sung Cho, owner of Ted's Burgers, which gets most of its lunch customers from Boeing. "They walk over in groups every day."

Workers in Anaheim declined to comment on the pending transfer, which will take place in two phases from 2007 to 2010. According to an internal survey, the move will add an average of five miles to the workers' daily commutes, spokeswoman Kelley said.

The Anaheim facility traces its origins to 1959, when North American Aviation of Downey built a radar test center at the site. The navigation system for the nuclear sub Nautilus, famous for sailing under the North Pole, was developed there, as was the guidance and control system for the Minuteman intercontinental ballistic missile, which changed the course of the Cold War.

The division also developed major components of the Apollo space program and did much of the pioneering work on night vision during the 1970s.

Now, in addition to guidance work and the Integrated Battlespace program, it is the development center for the nation's multibillion-dollar missile defense program.

Chicago-based Boeing said in January that it would reorganize its $30.5-billion defense business to reduce costs in the face of expected Pentagon spending cuts.

Kelley said no other moves were expected in Southern California as part of the realignment. Boeing is the region's largest private employer, with 31,000 local workers.

Analysts said the outlook was favorable for the programs the Anaheim workforce was handling.

Missile guidance work "is not a growth area, but it's not going to disappear overnight, and the Integrated Battlespace is a growth area," said Richard Phillips, an aerospace investment banker at Houlihan Lokey Howard & Zukin.

Separately, Boeing has warned that it will close its Long Beach assembly plant by the end of 2008 unless the Air Force places significant new orders for the C-17 transport aircraft produced there.

The future of the plant, which employs about 5,500 workers, is looking increasingly bleak. Boeing expects to make a decision within the next few weeks on whether to begin the process of shutting the plant. On Friday, 140 employees there were notified that they would be laid off in late September.

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