Most Workers Offered Transfer : Northrop to Close Plant Employing 1,600 in O.C.

Northrop Corp., the first aerospace company to set up shop in Orange County, announced Tuesday that it will shut down its local operation by the end of next year. The majority of the 1,600 employees at the Anaheim facility will transfer to other plants while an undetermined number will be laid off.

The aerospace giant is consolidating by transferring its Anaheim operations to facilities in El Segundo and Hawthorne in Los Angeles County. About 150 Anaheim employees will transfer to the El Segundo plant by Aug. 7 as the first stage of the consolidation.

Northrop officials declined to say how many people would be laid off. “There won’t be any significant layoffs,” said Maria Oharenko, a company spokeswoman. She refused to speculate further.

The company had previously announced that it will trim 500 positions from its Anaheim and Hawthorne facilities through layoffs and attrition. At a shareholders’ meeting last month, Northrop Chairman Thomas V. Jones announced that the company would cut its work force by 2,500 to 3,000 positions by the end of the year. Some of those jobs were believed to be in Anaheim.

Jones strongly suggested during the shareholders’ meeting that the Anaheim plant would be sold. But Northrop officials, seeking to temper Jones’ remarks, said at the time that no final decision about the future of the plant had been made.

On Tuesday, employees said the decision to shut down was unwelcome but not unexpected.

“They are all very upset,” said Bob Skelton Jr., a Northrop employee. “If they wanted to work in Hawthorne, they would have gotten a job at Hawthorne. But they got a job here.”

Several employees said they will look for other jobs in Orange County rather than remain with Northrop and commute out of the area.

“If their new location creates a longer commute than it would from Anaheim, and they do not wish to take the assignment, they could take a voluntary layoff in lieu of quitting,” said Oharenko.

Employees laid off are eligible for benefits, including unemployment compensation.

Anaheim Mayor Fred Hunter said the Northrop closure will be harmful to his city.

“It really does hurt us to have that many employees involved,” Hunter said. “It’s going to have a dramatic effect on the area. This is going to hurt.”

Northrop gave workers a timetable for the shutdown in an internal newsletter. According to that plan, only two programs will begin moving before next year. Most of the rest will start transferring operations between January and March, 1990. The machine shop will be the last to move, according to the newsletter.

Employees in Anaheim design and manufacture infrared and optical sensors used by pilots and anti-aircraft missile crews to shoot down their targets. They also manufacture equipment to test missiles.

The Anaheim and Hawthorne operations make up Northrop’s electronics systems division, which has suffered in recent years from production delays and declining revenue as several key programs have neared completion. In particular, analysts said the missile test equipment group in Anaheim and the MX missile project in Hawthorne have experienced serious revenue decline.

Northrop is facing difficulties nationally in many of its major military programs. The company has said it expects 1989 sales to remain unchanged from last year’s $5.8 billion.

The aerospace industry is undergoing a painful contraction as defense procurement budgets decline. Because those budgets are expected to continue shrinking for the foreseeable future, individual companies are facing increasing competitive pressure for smaller contracts.

Citing increased competition, Hughes Aircraft Co. announced last week that it will eliminate 6,000 jobs by the end of the year, mostly in Southern California. Hughes is Orange County’s largest private employer with 13,700 people working at five operations.

Northrop was the first major aerospace company to put down roots in Orange County with the 1951 opening of the Anaheim plant. The company at the time said it picked Anaheim because of the area’s growing labor force, favorable tax rates and desirable residential communities.

On 33 acres of land that had been orange groves, Northrop erected a facility to build optical gun sights used to help the Army’s T-41 tank crews zero in on enemy targets. Because of the demands of the war in Korea, the company started operating the plant less than three months after construction started.

Other large aerospace companies, including Rockwell and Hughes, soon followed Northrop into Orange County. Meanwhile, an increasing number of smaller aerospace concerns sprang up throughout the county to meet the needs of their bigger brethren.

Real estate experts said the sale of Northrop’s Anaheim facility, consisting of five buildings on 53 acres, will be lucrative.

Estimates of the value of Northrop’s property by industrial land brokers and stock analysts ranged from $56 million to $90 million.

“The land is worth $35 million; the buildings are worth an estimated $27 million,” said Lawrence M. Harris, analyst with Bateman Eichler, Hill Richards Inc. in Los Angeles. “That’s a total of $62 million.”

Northrop also leases an additional 10 acres of land that it has an option to buy.

The plant is in a mixed neighborhood in north Anaheim near the Fullerton city line, an area of housing, stores, factories and some offices.

Commercial real estate brokers said Northrop may find many buyers for its land but few takers for its buildings. The reason is they may need extensive remodeling before another company could move in. The overhaul could cost more than simply tearing down the buildings and building new ones.

Northrop’s stock was down 63 cents Tuesday to close at $24.63.

NORTHROP IN ANAHEIM

What: Northrop Corp., electronics systems division

Where: Anaheim

Employees: 1,600

Contracts: Builds optical and infrared sensors that enable pilots and anti-aircraft missile crews to shoot down targets. Also manufactures test equipment used to check Navy missiles.

Opened: 1951

Staff writer Michael Flagg contributed to this story.