Orbit Instrument to Close Cypress Plant, Cut 40 Jobs

Orbit Instrument Corp. of California, a small defense electronics firm, said Friday it will shut down its production plant here in May, resulting in the loss of 40 jobs, because of declining federal defense spending.

The manufacturing employees will be laid off, and the operation will be consolidated with the main Orbit Instrument plant and corporate headquarters in Long Island, N.Y.

The California subsidiary will retain a small sales and engineering office in Cypress, but with fewer than the current seven employees, said Matthew Binder, Orbit’s vice president for finance.

Orbit reported $50 million in revenue for fiscal 1989, ended June 30, and $30 million in sales for the first half of fiscal ’90. It opened the Cypress manufacturing plant in 1981 during the defense spending boom that followed Ronald Reagan’s inauguration as President.

Binder said the subsidiary, which never had more than 50 employees, was created to give Orbit a presence in Southern California, where so many prime defense contractors are. But with defense spending on the decline in recent years and with the likelihood that reductions will continue because of the easing of East-West tensions, Orbit officials decided “to maximize profit by keeping all the manufacturing in one place,” Binder said.

The same kind of decisions are being made daily at other defense plants throughout the nation, and analysts have been predicting a wave of consolidations, plant closures and layoffs as the industry adjusts to cuts in defense programs.

Binder said that Orbit, like many others, began diversifying several years ago to reduce its dependence on defense work, which now accounts for about 35% of annual sales.

In addition to Orbit Instrument, which has 175 employees in New York, and the Orbit Instrument of California subsidiary, the company owns Orbit Semiconductor in Sunnyvale, a 175-employee manufacturer of customized semiconductors. It also owns USA Classic, which has 300 employees at plants in Tennessee and Alabama making men’s and boys’ sports clothing.