Southern California’s once high-flying aerospace industry navigated major disappointment last year and started 2014 with even more turbulence.
A region whose economy was at one time largely defined by aircraft and space companies continued to see its former stature in this critical economic sector decline.
In the span of a few months, Southern Californians learned that a major local aircraft assembly line would close, the federal government left the state out of an important trial for an emerging class of aviation technology and the region missed out on a new airliner program that could have created thousands of local jobs.
On top of that, a longtime local aerospace program may be just a few years from closure.
“We’re probably in a transition period where we’re looking at some changes happening in conventional aviation, both the military side of things and the commercial side of things,” said Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corp. “But at the same time, we’re looking at some new areas of opportunity.”
In September, Boeing broke some bad news that the company, the local community and members of Congress spent years trying to prevent or delay.
The aerospace giant announced that its massive Long Beach plant where it has built C-17 military cargo planes for more than two decades would close in 2015 because of insufficient orders.
That announcement was the culmination of a stubborn tug of war between Boeing and its supporters at one end and the shifting realities of an aerospace marketplace that saw federal government dollars and international orders dry up for the large, dynamic airlifter known as the Globemaster III.
That C-17 is the last major conventional airplane assembled in the Golden State.
The Long Beach plant closure will leave about 2,000 local Boeing employees in search of new work, and place another hurdle in front of Southern California’s efforts to recover from the lingering impact of the Great Recession.
“The C-17 is California’s last jet. Losing it will hurt, said Richard Aboulafia, aerospace analyst with the Teal Group Corp. in Fairfax, Va., in an email.
The plant’s closure will ripple through the region’s economy beyond the loss of high-paying jobs as local aerospace suppliers and even restaurants that cater to Boeing employees see a loss of business.
For example, each direct aerospace job in Los Angeles County supports two additional jobs through “indirect and induced effects,” according to a report by the LAEDC.
With an average annual pay of $81,536, Los Angeles County aerospace manufacturing jobs pay 50 percent more than the typical manufacturing position.
Adding new work
Before the September C-17 closure announcement, the region enjoyed some good news when Boeing said in two separate announcements over the summer that it would bring to Long Beach several hundred engineers and other professionals to work on the company’s commercial aircraft.
The Southland received even more good news in November when Boeing said it would open competition to build the new 777X airliner to locations outside the company’s traditional manufacturing base of Puget Sound, Wash. The opportunity came after a labor dispute between the company and a Washington machinists union.
California was one of 22 states to bid for part or all of the major production work for the 777X, which will be the world’s largest and most efficient twin-engine jet.
California’s bid centered on repurposing Long Beach’s C-17 plant to perform work on the new plane, with the nearby ports, other transportation infrastructure and universities to support the effort.
California was considered a leading contender to land 777X work.
Boeing had said it would announce where it will build the 777X by early 2014.
But as Boeing was conducting its 777X selection process, California was dealt another setback.
In late December, the Federal Aviation Administration released its list of six locations designated as test sites for pilotless drones to perform civil aviation activities.
California failed to make the list even though the state houses major military drone development and production work by such companies as Northrop Grumman Corp., Lockheed Martin Corp., General Atomics and AeroVironment Inc.
January brought more bad news. Boeing machinists in Puget Sound narrowly accepted a 777X contract with the aerospace giant, dashing the Southland’s hopes of landing major work for one of the most economically promising new aerospace programs in decades.
The region’s string of bad new may not be over.
The F/A-18 Super Hornet, the Navy’s workhorse jet fighter built by Boeing and Northrop, may be in jeopardy. About 900 Northrop employees assemble the plane’s center aft fuselage at an El Segundo plant. Boeing, the prime contractor, performs final assembly in St. Louis.
Whereas Boeing had used its own funds to keep the C-17 line open as it sought new orders, the company has until March to decide whether to invest tens of millions of dollars to maintain Super Hornet production. Without such self-funding and if new orders do not materialize soon, the twin-engine fighter jet would end production in 2016.
“California continues to face the challenges that primarily are a result of the declining federal spending,” said Assemblyman Al Muratsuchi, a Torrance Democrat and chairman of the Select Committee on Aerospace. “But we do have exciting new opportunities that we need to capitalize on and those include private space exploration.”
SpaceX, the Hawthorne-based maker of rockets and spacecraft, is one of Southern California’s most high-profile aerospace success stories, with an ever-growing local workforce helping to lower the cost of reaching space.
Officially known as Space Exploration Technologies Corp., the company is the first private entity to send a spacecraft to the International Space Station. The company has a $1.6 billion NASA contract to resupply the orbiting lab, with possible astronaut transportation a few years away.
In December, SpaceX delivered a satellite into geostationary orbit, a first for the 11-year-old company.
SpaceX continues to rack up orders from commercial customers and is working to achieve certification for U.S. military launches.
Another bright spot for the region is that while aerospace jobs continue to decline, the trend has mostly leveled off. For example, Los Angeles County’s aerospace manufacturing jobs have remained around 38,000 for the past few years, after two decades of often steep drops, Kleinhenz said.
Many of these manufacturing workers, in addition to engineers and other aerospace professionals, make up a still-vibrant economic sector that produces rockets, satellites, sensors and numerous aircraft parts.
Those strengths and the various setbacks of the past few months may have revealed the state’s new reality.
“California will remain a major center for high-value-added component and aerospace electronics manufacturing, but the grand old days of large aircraft manufacturing operations are drawing to a close,” Aboulafia said.