Military deals spur contractor job gains / The list: Aerospace & defense contractors

A steady diet of military work offset a decline in commercial deals for Orange County's biggest aerospace and defense contractors in the past year.

The top 20 aerospace and defense businesses on this week's Business Journal list grew OC employment 4% to 21,874 workers for a gain of 761 workers.

OC's crop of aerospace and defense companies build products ranging from gear for fighter jets to antiterrorist cockpit doors for commercial airplanes.

This year's list reflects a general uptick in defense work, as it did last year.

Globally, the companies on this year's list didn't chalk up enough military gains to offset losses on the commercial side.

Total employment fell 4% to 498,259 in the past year.

Commercial aerospace still is recovering from the Sept. 11, 2001, attacks and the general downturn of the past couple of years.

The list is dominated by perennial No. 1 Boeing Co., whose Integrated Defense Systems unit has a big Seal Beach operation. Boeing also has operations in Huntington Beach, Anaheim and Irvine, where its Connexion unit, which builds high-speed Internet access gear for commercial planes, is based.

OC's Boeing units boosted their headcount by 6% to 11,439, adding 599 jobs.

Without Boeing, which accounts for more than half of aerospace and defense workers in the county, the remaining 19 contractors-chiefly defense companies-posted growth of 2%, or 162 workers.

Defense contractors are enjoying the fruits of four years of higher government spending on next-generation fighter jets, such as the F-22 Raptor and F-35 Joint Strike Fighter; missile defense; and other projects.

Boeing's Anaheim operation, for instance, is working on a ground-based defense, part of the military's Ballistic Missile Defense program, formerly known as National Missile Defense.

The company-OC's biggest manufacturing employer-last year won a $425 million contract to develop and test a second booster for the proposed missile shield.

Boeing also won a Pentagon contract last year to tie together the Army's ground, air and space systems. The project is expected to be worth up to $5 billion in the next five years. About 300 employees are working on the contract in Huntington Beach.

"Our employee growth in OC is being driven by that work and the missile shield work," said Boeing spokesman Dan Beck. "We'll probably be adding more people here as we go along."

One potential hurdle for Boeing: Last week two former workers at its Huntington Beach Delta rocket unit were charged with stealing trade secrets from Lockheed Martin Corp. The Air Force also is investigating and could transfer some launch work won by Boeing to Lockheed Martin.

Like Boeing, other OC contractors are counting on defense work to offset sagging commercial aerospace work.

Officials at Newport Beach aerospace and defense consultant SM&A said they expect Secretary of Defense Donald Rumsfeld's modernization initiatives will drive future defense spending.

Rumsfeld's push argues for using fewer troops moving faster in lightning-quick attacks. Communications and equipment are central to his strategy.

It's why officials at SM&A don't see the Iraq war's quick end as a growth deflator.

"We may end up seeing an acceleration of programs to improve communications and to reduce (military) targeting time," said Chuck DeVore, SM&A vice president of communiczations and research.

No. 2 Huntington Beach-based C&D Aerospace Group moved up one spot from last year, virtually unchanged at 1,670 workers.

C&D earlier this year won a Boeing contract to build antiterrorist cockpit doors and to help retrofit U.S. commercial jets in the wake of the Sept. 11 attacks.

The aerospace contractor also is supplying passenger cabin and cargo compartment interiors for the Embraer 170 and 190 commercial jets built by Brazil's Embraer-Empresa Brasileira de Aeronautica SA. The contract work has been ongoing since 1999.

Embraer's 170 jet took its maiden flight last year, with the 190 set for takeoff in 2004.

"We expect to hold employment steady over the next year because of the Embraer work," said Tom McFarland, C&D's marketing chief. The contractor does similar work for all of Montreal-based Bombardier Inc.'s commercial jets.

No. 3 Irvine-based Parker Aerospace, a unit of Cleveland-based Parker Hannifin Corp., fell one spot after trimming its workforce 3% to 1,650.

Parker is working on a Lockheed Martin contract on the F-35 Joint Strike Fighter-work that's expected to bring in $5 billion for Parker in the next 20 years.

Other contracts for the Irvine unit include Sikorsky Aircraft Corp.'s Black Hawk helicopter and Boeing's C-17 Globemaster III military transport plane, which Boeing assembles in Long Beach with spare parts support from Huntington Beach.

Parker's commercial work includes flight controls and hydraulic and fuel systems for Embraer-Empresa and Bombardier.

"Our commercial business cycles tend to follow what happens at Boeing," said Joel Benkie, Parker Aerospace's general manager.

Parker expects work from the F-22 Raptor to bolster sales by more than $700 million in the next decade.

The company's OC operations build engine fuel nozzles, start control valves, flight control actuators and other parts for the Raptor.

At No. 4 is the Fullerton operation of Simi Valley's Alcoa Fastening Systems Inc., a unit of Pittsburgh, Penn.-based Alcoa Inc.

The contractor, which makes aerospace fasteners, has an estimated 1,277 workers.

Alcoa bought the unit in December from Dulles, Va.-based Fairchild Corp. A separate Fairchild unit, Fairchild Aerostructures, didn't make this year's cutoff with 53 workers.

Rounding out the top five is the Fullerton operation of Lexington, Mass.-based Raytheon Co., which posted a 5% dip in OC employment to 1,100.

A big defense gainer: No. 12 Costa Mesa-based Ceradyne Inc. The maker of ceramic armor for the military has won a number of deals with the Army.

Ceradyne's OC headcount is up 7% to 318, while its shares have surged 130% this year to 17 at recent check.

No. 13 Kaiser Electroprecision in Irvine cut 24% of its workers to 250, dropping it two spots on the list. Officials at Kaiser, a precision aircraft parts unit of Cedar Rapids, Iowa-based Rockwell Collins Inc., weren't available for comment. Rockwell Collins' company wide workforce fell 17% to 14,500 in the past year.

List Debuts

Newcomers on this year's list include No. 14 Santa Ana-based Irvin Aerospace Inc., which grew its OC job count 88% to 225. The parachute and survival gear maker is a unit of the United Kingdom's Air-Sea Survival Equipment Ltd.

"The war drove our growth over the past year," said Phil Delurgio, senior technical advisor at Irvin. "We're building a lot of specialized products for the U.S. special forces."

Irvin's job gains came as the contractor formally moved its U.S. headquarters from Hope Mills, N.C., to Santa Ana in April.

Also new on this year's list is No. 19 Santa Ana-based Pacific Consolidated Industries LP, which boosted its worker count 22% to 126. Like Irvin, the contractor has seen an uptick because of the Iraq conflict.

"The war drove the new hiring," said Pacific Consolidated President Martin Self. "We expect to keep our employee count steady over the next year."

Pacific Consolidated makes oxygen-producing gear used by military jet pilots and medical personnel treating patients in surgery. The contractor also makes nitrogen-producing equipment used for military airplane tires and struts.