Business: Aerospace: End of the Gravy Years

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McDonnell Douglas is in considerably better shape. Its St. Louis complex will be kept busy producing the F-15 fighter, a contract that could eventually be worth $8 billion. But in the company's California plants, employment has dropped from 71,000 to 56,000, reflecting space cutbacks and dwindling orders for DC-8s and DC-9s. Grumman, despite a contract with a potential value of $5 billion to build the Navy's Mach 2 F-14 fighter plane, expects to lay off 1,200 engineers this year.

Lockheed's problems center around the giant C-5A transport, which overran cost estimates by $1 billion in development. The Air Force has cut back its C-5A order from 115 aircraft to 81, and the final estimates of the loss to Lockheed have yet to come in. Overall, Lockheed is feeling less pinch than most of its competitors. It expects to increase its total work force this year by 2,000, to 100,000, as production begins on its L-1011 airbus. Similarly, General Dynamics plans no cutbacks in its 70,000-man labor force during 1970 —unless the Air Force cancels plans to buy 40 more of the controversial F-111 swing-wing fighter-bombers.

The slowdown has been noticed least at Los Angeles' Northrop Corp., which is farther ahead than any of its competitors in diversifying. Northrop's current contracts range from building a telecommunications network for Iran, to making fuselages for the Boeing 747, to work on the P530 tactical fighter. In the six months from August to January, Northrop boosted sales by 16% over a similar period in 1968, to $295,942,000.

Seattle Pessimist. So large is the aerospace industry that the fortunes of whole communities are bound up in the fate of individual companies and even single contract awards. In Seattle, one out of every six jobs depends on Boeing, and unemployment is heading toward 6%. The company's cutbacks will cost the city an estimated $500 million worth of business this year. A current Seattle jape defines a pessimist as a Boeing worker who leaves his car running in the parking lot. Rather than move away, most unemployed Seattleites are dipping into their savings, waiting until business turns up again.

Cape Kennedy has suffered the most from the slowdown in the space program. Employment has dropped from 24,000 a year ago to 17,500 today, and "pink-slip psychology" lends a frantic tone to Friday night parties at the local Hilton. Houses that sold for $25,000 a year ago now bring $1,500 less. Space contractors organized an employment service and invited more than 100 organizations—life insurance companies, boat builders, even the CIA—to interview laid-off employees. They found 600 jobs for 2,000 men. One $15,000-a-year engineer wound up packing groceries in a supermarket for $1.65 an hour.