Manufacturing to Grow Slightly, Tech, High Costs Still a Drag

Manufacturing to Grow Slightly, Tech, High Costs Still a Drag

By CHRIS CZIBORR

Orange County manufacturers,among the hardest hit in the downturn of the past two years,are in for an uptick in 2003.






The new year likely will see slight manufacturing job growth,vs. a 2.9% decline in 2002 and a 2.3% contraction in 2001.






OC makers of technology, durable and non-durable products are expected to grow by 0.2% in 2003 to 219,264 jobs, according to Chapman University.






“Layoffs in the manufacturing sector will level off at the beginning of the year, and we expect a slight pickup at the end of 2003,” said Esmael Adibi, director and professor of economics at Chapman. “There are lots of good things happening today with the economy. Interest rates are low. Inflation is low. Productivity is high. Job growth will be decent.”






Anil Puri, dean of the College of Business at Cal State Fullerton, offered a less rosy outlook.






“Until business recovers, manufacturing will continue to be in the doldrums,” Puri said. “Business investment has started to firm up, but I don’t expect a major burst of activity until spring at the earliest.”






Surplus production capacity at OC plants has yet to fully work itself out, Puri said.






Defense remains a bright spot for OC’s manufacturing sector.






Defense contractors should continue to get more work in 2003. The Defense Department budget is set to grow by $48 billion to $355 billion for fiscal year 2003.






“Defense spending will go through the roof over the next few years,” Adibi said. “We expect orders to increase 30% to 40%. We don’t have prime contractors in Orange County, but we do have a lot of subcontractors.”






OC’s largest defense and aerospace contractors employ more than 20,000 people here.






Defense contractors are seeing the fruits of three years of new government spending on fighter jets, missiles and other projects,all of which were in the works before the terrorist attacks.






While the war on terrorism and a possible war with Iraq stand to further swell military spending, OC defense contractors say they aren’t yet feeling the full impact.






Most expect to add workers for defense projects in the next few years.






“The effects of defense spending are not felt right away, so there won’t be new jobs for a while,” Adibi said.






Chicago-based Boeing Co. is among those starting to see more defense work.






In Anaheim, Boeing is working on the ground-based midcourse defense portion of the Ballistic Missile Defense program.






Boeing,OC’s biggest manufacturing employer,won a $425 million contract in 2002 to develop and test a second booster for the proposed missile shield.






Boeing also won a Pentagon contract this 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.






Work on the contract is expected in Huntington Beach and Seal Beach.






Boeing, like other contractors, is counting on defense work to offset sagging commercial aerospace work.






The county’s second-largest contractor, Irvine-based fuel and flight control systems maker Parker Aerospace, expects to add jobs on the heels of recently won defense work. The company is a unit of Cleveland-based Parker Hannifin Corp.






“What we’re seeing is a firming up of orders we had in place prior to Sept. 11,” said Joel Benkie, Parker Aerospace’s general manager. “We do anticipate growth in our staff, but not at a high level.”






Parker is working for Lockheed Martin Corp. on the F-35 Joint Strike Fighter. That work stands to bring in $5 billion for Parker in the next two decades.






Parker Aerospace officials also expect to get a boost from the F-22 Raptor fighter jet. In the next 12 years, Parker’s OC operations will make $713 million worth of engine fuel nozzles, start control valves, flight control actuators and other parts for the jet.






Huntington Beach-based C