Planes for Rough Weather

Since it took to the skies in January, Boeing's 747 has had the multibillion-dollar superjet market all to itself. Last week in California, two hungry competitors served notice that Jumbo's period of splendid isolation is coming to an end.

Lockheed showed off its first giant L-1011 "airbus," which gleamed under the hangar lights like a winged dolphin. While company officials sat proudly by, Governor Ronald Reagan called the new plane "one of the most sophisticated commercial jetliners ever produced." Several days later, in a neat bit of oneupmanship, McDonnell Douglas brought in Vice President Spiro Agnew to speak at the roll-out of its new airbus, the DC-10. Large enough to accommodate 270 passengers, the new planes are intended to displace the 747 on many medium-range hauls.

Both planes have three jet engines, are approximately 175 feet long and 19 feet wide inside the cabin; the 747 is 231 feet long and 20 feet wide. The first airbuses, which fly at up to 600 m.p.h., can operate profitably on routes from 250 to 1,500 miles. The 747 usually hauls up to 392 passengers at 590 m.p.h. and has a range of 6,500 miles. McDonnell Douglas already has orders for a stretched-out airbus that will have a range of 6,100 miles, enough to hop the Atlantic.

The Pentagon's Perigee. The new jets will go into operation late next year, and the airlines have orders or options for 387 of them worth an estimated $6 billion. Though the planemakers will need many more orders to break even, what they have now is like food after a fast. The aerospace industry has been jolted by cutbacks in military and space projects. Demands are rising in and out of Congress that even more Government spending be switched away from military projects to civilian needs like housing and pollution control. Aerospace sales for this year are expected to be about $28 billion, down from a peak $30 billion in 1968.

The Government has lately helped the industry by passing out several new contracts. But most were relatively small awards for preliminary research on projects that will take years to become rich money makers--if they ever do. Boeing, for example, was selected this month to begin work on the Airborne Warning and Control System. Though the project could be worth $2 billion by 1976, the initial payment was a meager $16.5 million.

The aerospace industry, which is the nation's largest manufacturing employer, is laying off thousands of skilled workers each month. In the twelve months ending this September, an estimated 168,000 aerospace workers will have lost their jobs, and employment in the industry will drop to 1,177,000. Many of the toolmakers, designers and other workers have been out of jobs for months. Employers in other fields are often afraid that aerospace workers, who are conditioned to working under cost-plus contracts with guaranteed profits, could not adjust to tightly budgeted production schedules. Other employers believe that aerospace veterans are interested only in temporary jobs, waiting to jump back to the plane-and-space plants at the first opportunity.

Disheartening Dole. The slump is grimly reflected in the communities surrounding aerospace plants. Seattle's unemployment problem is one of the worst in the nation. Boeing has reduced its payroll from 101,000 to 56,000 in two years. There are now 70,000 people on Seattle's welfare rolls, and 24,000 families are drawing food stamps. "We have not been hit this bad since the Depression," says Minor H. Baker, economist for the Seattle-First National Bank.

The situation is somewhat better around North American Rockwell's aerospace plants in the Los Angeles area. Some 11,000 employees have been laid off since January, but the company was recently awarded a potentially rich contract for the B-l strategic bomber and is planning to rehire up to 5,000 workers. St. Louis-based McDonnell Douglas has done well by maintaining a hefty backlog of orders, mainly for Phantom fighter-bombers. The work force is 104,000, down only 3,000 since the end of last year.

Too Much for Too Little. The company in the worst financial bind is Lockheed, the nation's biggest defense contractor. Lockheed's work force in Georgia and Southern California has been hacked by 10,500, and another 3,000 are expected to go by 1971. "Thousands of Ph.D.s are flooding the employment market," says Kaye Kiddoo, Lockheed's chief of manpower. "They all look shell-shocked." Though the company hopes to recoup through the L-101 1 and other projects, the start-up costs for the airbus have aggravated its financial plight. Lockheed is negotiating with the Government and 24 banks for a desperately needed financing package of $430 million. If that does not materialize, Lockheed might have to merge or face the threat of bankruptcy.

The trouble with the aerospace industry is that too many companies are competing for too little business and not doing enough to diversify. The well-paying jobs of its skilled workers ride precariously on the erratic ebb and flow of Government orders. For many workers, dislocation has become a way of life. Despite President Nixon's talk of switching the nation to a peacetime economy, the Government keeps some aerospace plants going by passing out marginal contracts instead of offering the industry guidance and inducements to spread into other fields. Senator Edward Kennedy plans to introduce a bill that would provide $450 million in subsidies for small defense contractors to convert more of their resources for use in civilian markets. It would be a modest but promising start.

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