Officials wait on Rocketdyne fate

San Fernando Valley Business Journal, Feb 14, 2005 by Jeff Weiss

Local officials are waiting and hoping that an impending sale of Boeing Co.'s Rocketdyne unit in the Valley will not have a major impact on the company's local facilities.

According to previously published reports, Boeing Co. is close to selling its Rocketdyne rocket engine manufacturing business to Hartford, Conn.-based United Technologies Corp., in a deal potentially worth up to $500 million. With any acquisition, layoffs are always possible; however, Valley business officials say no contingency plans are in place within the community if this should happen.

Chicago-based Boeing's decision to sell came as little surprise to industry experts, who had speculated for much of the past year that a deal was likely. Byron Wood, Rocketdyne's chief executive, declared to the Business Journal last August, that "somewhere between 2009 and 2010, the cliff might hit for Rocketdyne."

The venerable aerospace manufacturer employs more than 3,000 people at its facilities in the San Fernando Valley and Ventura County. The company currently designs and builds engines for the space shuttle and the Delta II and Delta IV satellite boosters, along with other products that generate an annual payroll of $320 million and a purchasing budget of $140 million for Los Angeles-area vendors. Last December, Boeing announced that it would shutter its Rocketdyne plant in Canoga Park by 2010, shifting those employees into its larger Chatsworth facility on DeSoto Avenue.

Bruce Ackerman, president and chief operating officer of the San Fernando Valley Economic Alliance, expressed optimism that United would preserve the status quo, preventing massive layoffs. Ackerman, along with former United Chambers of Commerce Chairman Bill Powers and Los Angeles City Councilman Dennis Zine, had worked on a "red" team last year that officials say talked to company officials and helped convince Boeing to continue operating in the Valley. Red teams are made up of local politicians, economic development officials and businesspeople and are activated when it is learned that a company might close a facility or move out of the area.

"I thought they were either going to move it to Chatsworth or sell, they sold it. It will interesting to see what United does to the facilities. We haven't gone done the path of deciding what to do if there are layoffs. My sources have indicating there aren't going to be significant layoffs," Ackerman said.

"That's the unknown, what United plans to do. If they plan to keep a presence here, then we could even see a growth of jobs."

Roberto Barragan, president of the Valley Economic Development Center, maligned the deal as one more sign of the decay of local manufacturing.

"This is one more nail in the coffin. I expect there to be layoffs and further consolidation into the existing facilities. Some employees will move and some will just lose their jobs," Barragan said. "Without a Valley effort to network aerospace companies like they do in San Diego, we will continue to lose jobs. This does not bode well for manufacturing in the Valley and Los Angeles as a whole. Perhaps the mayor's race should address this at some point."

John Mitchell, the media relations representative for Rocketdyne, wouldn't comment on the sale, referring to it as only conjecture.

"There have been a number of stories, but it has all been conjecture. The consolidation of Rocketdyne into the Chatsworth facility is ongoing. Gradually, the different departments are moving over. It's moving along pretty well." Mitchell said.

United Technologies declined to comment for the story. Currently, United makes smaller engines for multistage rockets while Rocketdyne manufactures the main booster rockets.

City Councilman Dennis Zine expressed his desire for the site to remain industrial. Zine also noted that in addition to the monetary concerns, Boeing may have decided to sell because of the environmental issues they had encountered with their Santa Susana Field Lab in the Simi Hills.

"Eventually, Boeing will relocate everything out of state. They have been burdened by workers' comp, high taxes, and environmental issues. United won't have to do a lot of retooling; they have the land, the space and the facilities. I'm happy to see the space remain industrial," Zine said. "No contingency plans have been made in case of layoffs. If there are any we'll work with the Work Force Centers to relocate those employees. We want to maintain those jobs. I don't want to see that land go commercial. I want it to be industrial."