Citing a shrinking Pentagon budget, Boeing Co. said Monday that it was relocating two key defense programs from Long Beach, where it employs 800 people, to Oklahoma City.
Beginning next year, the Chicago company said it would move its C-130 military cargo avionics and its B-1 bomber modernization programs. The relocation is expected to begin in the first quarter of next year and be completed by the end of 2012.
The move would deal another blow to the California economy, where unemployment stands at 12.3%. In January, Northrop Grumman Corp. announced plans to move its headquarters to the Washington, D.C., area from Los Angeles, where the company has been since it was founded in 1939.
There are about 800 jobs, mostly engineering positions, associated with the two Boeing programs in Long Beach. But the workforce is expected to drop to about 550 before the move as segments of the two programs wind down.
Some Long Beach employees will be offered the opportunity to relocate, but other positions will be hired locally in Oklahoma City, Boeing said.
The move is being made to cut costs, the company said.
"The customer told us to be more affordable," Boeing spokesman Forrest Gossett said. "This is one way we can do that."
Boeing declined to say how much it would save from the move to Oklahoma City, where there are already 250 people working on the B-1 bomber modernization. However, Gossett said Boeing would receive "business incentives" from the city to make the move.
The announcement came as the defense industry faces the prospects of a slowdown in Pentagon spending.
" The Pentagon has made it a top priority to cut costs," said Scott Hamilton, an aviation industry consultant and managing director of Leeham Co. in Issaquah, Wash. "Defense contractors are going to find a way to trim costs any way they can."