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Boeing faces job cuts after lost deal

The firm, which didn't get a satellite contract, will trim 750 positions.

May 21, 2008|Peter Pae | Times Staff Writer

Boeing Co., stinging from last week's loss of a major military satellite contract, is expected to announce today that it plans to slash the jobs of about 750 engineers and technicians, most of them in Southern California.

The job cuts mark one of the largest for the region's aerospace industry in the last few years and come on the heels of Boeing's losing out on what is expected to be one of the last big space programs for at least a decade.

The contract, potentially worth more than $3.5 billion to build a new generation of GPS satellites, was awarded to rival Lockheed Martin Corp.

The global positioning satellites are intended partly to make the now-ubiquitous GPS navigation equipment more accurate and powerful.

Chicago-based Boeing, the largest private employer in the region with 31,000 workers, would have made the satellites at its sprawling facility in El Segundo where it has a workforce of about 5,000.

The bulk of the job cuts are expected in the South Bay area, which in recent years enjoyed a resurgence of aerospace jobs amid a surge in defense spending.

A Boeing spokesman confirmed late Tuesday that the company was planning to announce the job cuts to its employees this morning.

"The unfortunate reality is that we have not brought in as much business as in prior years," said Joseph Tedino, a Boeing spokesman. "The official layoff notices are going out Wednesday. Most of them are in El Segundo and Seal Beach."

But Boeing officials and local aerospace executives said that the cuts could be offset by new jobs that are expected to be created at other aerospace firms with large operations in Southern California.

Flush with several multibillion-dollar contract wins in the last year, Century City-based Northrop Grumman Corp. has been on a hiring binge and expects to create about 1,000 jobs this year at operations stretching from Palmdale to San Diego.

In all, the three big contracts -- $35 billion to build aerial refueling tankers, $4 billion for unmanned surveillance planes and $1 billion for robotic fighter jets -- are expected to create about 15,000 jobs in Southern California at Northrop and at dozens of its subcontractors. Northrop has about 26,000 workers in the region.

Rep. Jane Harman (D-Venice), who represents the South Bay area in Congress, said she was hopeful that many of the workers would find other jobs within Boeing or at other aerospace companies that have won big Pentagon contracts in recent months.

"It's always disappointing when a local contractor loses, but overall I'm bullish on the aerospace workforce " Harman said in a telephone interview from her Washington office. "The prognosis for the industry is still strong."

For Boeing, losing the GPS contract was another blow to its battered defense business.

It was Boeing's third high-profile defeat in as many months, a reversal from a year ago when it won 9 out of 11 contracts for which it competed.

The company lost a $35-billion contest to build aerial refueling tankers for the Air Force in February and a $3.74-billion award to build unmanned spy planes for the Navy in April.

The setbacks also came as Boeing's satellite-making operations in El Segundo seemed to be on the road to recovery after a production debacle five years ago cost the company $1 billion and led to the loss of 3,000 jobs. With manufacturing and technical problems behind it, Boeing in recent months had begun to beef up its satellite workforce.

But in addition to Boeing's losing the GPS contract, the nation's other major space programs have been delayed or are facing funding cuts, damping Boeing's recovery.

"Many of the larger competitions have been repeatedly delayed, and losing the GPS contract further complicated matters," Tedino said. "It's an unfortunate action that has to be taken, but we are doing what we can to assist employees to get them redeployed elsewhere in Boeing."

The layoffs are expected in two stages. About 100 workers will receive their notices this week with their final workday in late July. The remaining 650 will receive their notices in June with their final day in August, Tedino said.

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peter.pae@latimes.com

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