Sunday, December 22, 1996 - Page updated at 12:00 AM

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Californians Bullish On Boeing -- Mcdonnell-Douglas Deal Spells Security For Beleaguered Aerospace Workers

Seattle Times Business Reporter

LONG BEACH, Calif. - Even before Boeing decided to acquire McDonnell Douglas, local officials here would joke that "What's good for Boeing is good for Southern California."

And now, says Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County, "It's etched in stone."

Boeing's proposed acquisition of McDonnell Douglas and its recent acquisition of Rockwell's aerospace and defense business for $3 billion means that Boeing will become Southern California's largest private-sector employer with about 42,000 employees, Kyser said.

The $13.3 billion McDonnell Douglas deal will help stabilize Southern California's aerospace industry, an industry recently battered by massive job loss as a result of the cutbacks in U.S. Defense budget spending.

With Boeing's business booming and the amount of available factory space shrinking with every announcement of a new megaorder, aviation experts believe the Long Beach plant soon will be producing parts and sections for Boeing aircraft. Eventually, Long Beach factory workers could even assemble Boeing jets.

"It's like an instant fix" for Boeing, said Bill Schoneberger, a noted aviation expert and the author of "California Wings: The History of Aviation in the Golden State."

While neither Boeing nor McDonnell Douglas officials would outline their plans, one possible scenario for the Long Beach plant would be the one that neighbor Northrop-Grumman fulfills. That

aerospace company builds 153 feet of every fuselage for Boeing's 747 and ships it to Seattle for final assembly.

"I think you still have an enormous amount of technological capability in Southern California," Schoneberger said. "I think it's one of the key reasons why Boeing bought Rockwell and McDonnell Douglas."

Long Beach in transition

Southern California was once the undisputed capital of the nation's aerospace and defense industry, supplying commercial jetliners to the world's airlines, B-1 bombers to the Pentagon and the Space Shuttle to the National Aeronautics and Space Administration (NASA).

Most of the aerospace companies, from Northrop-Grumman and Hughes Electronics to McDonnell Douglas and Rockwell, are in an area south of Los Angeles near the Pacific Ocean called Southland.

But the end of the Cold War forced the consolidation of the U.S. defense industry. Many of the major Southland companies experienced massive layoffs and plant closings in the early 1990s. That helped trigger California's economic recession.

The aerospace industry, which once employed nearly 300,000 workers in Los Angeles County, now employs about 134,000 people.

Danny Crandell, a McDonnell Douglas mechanic for the C-17, remembers that 20 years ago finding a job in the aerospace industry was pretty easy.

"In the beginning, everybody was hiring and you always had a place to go," Crandell said. "You had Northrop, Hughes, Douglas, Lockheed. If one was laying off, the other was hiring. You had a couple of options. Now, it's like Douglas or else."

The Douglas Aircraft Co., the commercial aircraft division of McDonnell Douglas, employed 50,000 at its Long Beach plant during the height of World War II. In 1967, Douglas merged with McDonnell Aircraft Co. to form the McDonnell Douglas Corp.

Today, the company is headquartered in St. Louis, Mo., and employs fewer than 25,000 in Southern California.

At Long Beach, about 10,000 people assemble the MD-11 widebody jet, the MD-80 and the MD-90 twin jets. Another 9,000 workers produce the C-17 military cargo plane. And 6,000 people are employed at the company's Huntington Beach space division.

McDonnell Douglas remains the largest private employer in Long Beach, but its impact on the city of 440,000 will never be what it was before the collapse of Communism.

"The downsizing changed the direction of our economy," said Long Beach Mayor Beverly O'Neill. "We were always known as an aerospace and Navy town. We are not going to be either.

"Now, we've changed our emphasis to international trade and tourism. We really are a city in transition."

The consolidation of the defense industry, however, spawned a number of aerospace mergers. Boeing became an active player, but McDonnell Douglas remained on the sidelines, failing to buy other companies that could help it grow and modernize some of its outdated factories.

By acquiring McDonnell Douglas and Rockwell, Boeing now secures its position as a long-term player in the commercial-aviation, defense and space markets. And Boeing's enlarged presence in Southern California strengthens the prospects for workers and for the region's overall aerospace industry.

"It gives stability to our aerospace industry," said Kyser, of the Los Angeles County EDC. "A lot of people in Southern California were skeptical about how long McDonnell Douglas could last. They were viewed as an end game."

`Now, there is some hope'

For McDonnell Douglas employees such as Dennis Moore, the proposed merger offers some hope for a future where many saw none.

Moore, a senior production manager for the MD-11, now feels he can sell his San Diego home and move his family closer to the sprawling Long Beach aircraft factory.

"I see this as an opportunity to bring my family here," said Moore, who has been shuttling between Long Beach and San Diego, where his family still lives. "We backed out of buying a house here because we didn't feel confident. Now I feel there is some hope."

To be sure, other employees are concerned that the proposed merger could mean a loss of permanent jobs. So far, Boeing and McDonnell Douglas officials say that won't happen. There will be some cutbacks at the corporate level, but not on the factory floor.

Still, many in Long Beach remain skeptical.

"We're really a little bit nervous about it," said Ricky Parker, an electrical assembler for the C-17. "We were feeling a little bit shaky before the merger, and others are even more concerned about their jobs because they really don't know what's going to happen."

It is easy to see why some McDonnell Douglas employees lacked much optimism for the future. A tour of some of the company's commercial aviation operations revealed factories sorely in need of modernization and upgrades. They offer a stark contrast to the more modern, state-of-the-art factories churning out Boeing jets.

Some of these factories, built in the 1940s and still coated in the military colors of olive green and gray, have hardly changed since Douglas delivered more than 31,000 bombers and fighters to the U.S. military during World War II.

In one vintage building that now houses engineering labs and a computer center, Douglas workers produced 3,000 B-17 fighter bombers for the Allied cause.

"We've had previous experience working with Boeing before," noted Don Hanson, a spokesman for McDonnell Douglas. But "we haven't changed the color scheme much."

Good workers, aging plants

The fact McDonnell Douglas decided against reinvesting and modernizing its commercial aircraft factories has long frustrated its work force. But it is also a source of some perverse pride.

Douglas workers say they still produce commercial passenger jets that can compete with Boeing airplanes, but they do it with fewer resources.

"We're dealing with technology that's 20 years behind Boeing but we're still building a great airplane," said Kedrick Legg, president of the United Aerospace Workers, Local 148, which represents McDonnell Douglas production workers. "They're going to inherit a talented work force."

But McDonnell Douglas workers also fear the company's antiquated factories could pose a liability once the current commercial boom in new aircraft orders is over.

"Personally, I wonder what they're going to do with Long Beach after the up cycle is over in five or six years," said engineer William Bush.

The company, he said, did not launch future commercial aircraft models because of an unwillingness to modernize its plants.

Still, Bush preferred to dwell on the positive. "It could have been worse," he said. "They could have shut down the plant."

Scores of McDonnell Douglas engineers and production workers echoed the same sentiment. That without a partner or a huge infusion of cash, the company was doomed.

Douglas Aircraft still has a backlog of 200 firm orders. That will keep the factories running for about four years. But other than its first customer for the 100-passenger MD-95 - the financially shaky ValueJet - its future prospects were grim. Now employees and local government leaders have hope that Douglas will have a role in the future of commercial aviation.

For the most part, McDonnell Douglas workers are waiting eagerly for their new assignments.

"We're going down the same road together," said Joe Price, a Douglas fabrication worker. "We're not sure where we're going, but I can't wait to get there, because I think we're heading in the right direction."

Copyright (c) 1996 Seattle Times Company, All Rights Reserved.


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