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Thursday, Sep 21, 2023

Rebound–Lockheed Pull-Out Not Expected to Hurt Antelope Valley

Perhaps the biggest sign that the Antelope Valley is no longer completely dependent on aerospace jobs was its reaction to Lockheed Martin Corp.’s recent announcement that it would cut 800 jobs at its Palmdale plant. In a nutshell, “been there, done that” was the collective response from city officials and economists, who said while the job losses will be felt, they won’t have a major impact. “We’re not unaccustomed to layoffs here,” said Larry Grooms, president of the Greater Antelope Valley Economic Alliance. “It will have an impact, but less this year than (it would have in) previous years.” While Grooms and others believe the layoffs could have a slight ripple effect on subcontractors who work with Lockheed, they don’t expect the cuts to have a wider economic impact. That optimistic outlook comes in large part from a deal signed by SR Technics in December that will bring 5,000 jobs to the Palmdale area over the next five years, as the company moves its North American maintenance operations to the area. SR Technics plans to create 1,000 new jobs at the facility by the end of the year meaning most of the workers laid off by Lockheed should have little trouble getting new jobs with SR Technics. “The (Antelope Valley has) gone a half step back and soon they’ll take one big step forward,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. The Antelope Valley has also seen an influx of non-aerospace companies, such as Starwood Hotels & Resorts, which has a reservation call center in Lancaster, and Rite Aid Corp., which moved its local distribution center to the area. In addition, a larger portion of the job force now commutes to jobs in the San Fernando Valley and even farther south, making the area less dependent on local aerospace. Even so, aerospace is still a big part of the Antelope Valley economy. Both Lockheed and Boeing Co. have thousands of workers based at the Air Force’s Plant 42 at the Palmdale Airport. And the aerospace landscape is still in a state of flux, meaning Palmdale will likely see more job losses. “This valley has always been on the cutting edge, and sometimes the bleeding edge, of technology,” Grooms said. Bethesda, Md.-based Lockheed announced in late January that it would cut 2,800 jobs, 2 percent of its 140,000 jobs worldwide. The cuts are meant to save the company $200 million annually, Lockheed officials said. As part of the restructuring, Skunk Works, which has a history of developing top-secret aircraft for the U.S. military, will no longer be a separate company. It will instead fall under the newly created Lockheed Martin Aeronautics Co. based in Fort Worth. Last year, Lockheed cut 600 jobs at its Palmdale facilities. And Boeing has also cut jobs in the last few years. “This sector has seen a lot of pain and it will continue to see pain,” Kyser said. “Palmdale is still working on the Joint Strike Fighter, which is probably the last major (defense) project. There’s nothing in the pipeline. It’s wait and see.” The Joint Strike Fighter project is slated as a $750 billion, 3,000-plane program, making it the largest defense contract ever. It is expected to generate 10,000 assembly plant jobs, and 20,000 more for subcontractors. The fighter will be a multi-branch airplane, used by the Navy, Air Force and Marines. It would eventually replace the F-16, F-15 and F/A-18 now used by the military. Lockheed and Boeing are locked in competition for the project. Both companies are developing prototypes at Plant 42. The Defense Department will announce the winner in 2001. The department had been billing the project as a winner-take-all deal, which would mean massive job cuts for the loser. But in late January, Pentagon officials asked a panel to look at ways to help the losing company remain financially healthy and competitive. And there is talk of breaking the contract up between the two companies. Lockheed has said that, if it wins the contract, it will produce the aircraft at its Fort Worth, Texas facilities. Boeing has said it would build the planes in St. Louis. But Palmdale politicians and economic boosters are hoping to keep the project in the Antelope Valley. Last year, the city and state of California commissioned a report showing that Boeing and Lockheed could save $2.2 billion over the life of the JSF contract if they kept operations in Palmdale. The savings would come partly from tax incentives from the foreign trade zone and job enterprise zone at Plant 42. U.S. Rep. Buck McKeon, R-Palmdale, is now pushing the Pentagon to conduct a similar study, encouraging the winner to stay in Palmdale. A similar bill was killed in the last congressional session, but David Foy, press secretary for McKeon, believes it has a better chance of being approved this year. “We’re hoping it puts pressure on the contractor to choose Palmdale, even if they don’t have to,” Foy said. Foy and others said, if Palmdale isn’t able to lure the winning company to build the JSF in the Antelope Valley, it wouldn’t have a devastating effect. The only job losses would come from the small force of workers designing the prototype. Grooms said that, even if the project is moved to St. Louis or Fort Worth, he expects Palmdale to see a good deal of subcontracting work. Palmdale also still has a chance to convince Lockheed to base production of the X-33 Venture Star rocket plane at Plant 42. The X-33 would be a reusable spacecraft that is being developed with NASA in Palmdale. But that and other defense deals planned for the Antelope Valley pale in comparison to the Joint Strike Fighter budget. For that reason, Palmdale is even more dependent on the SR Technics deal and future deals like it.

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