Historic Move: Grumman Corp. Leaves Long Island
IN a historic move, Grumman Corporation - one of the nation's largest aerospace contractors and the last remaining builder of fighter/bomber military aircraft in the Northeast - is shutting down its manufacturing facilities on Long Island, N.Y.
``We've all known this was coming for some time now, but the announcement this week is the `coup de grace,' '' says Roger Wunderlich, editor of the Long Island Historical Journal and a professor at the State University of New York at Stony Brook.
Long Island has long been synonymous with the defense industry. Grumman's production dates back to the 1930s. During World War II, defense workers on Long Island turned out more than 600 military aircraft a month for Grumman. Nor was Grumman alone: Republic Aviation, in Farmingdale, N.Y., also manufactured military aircraft.
But by the late 1980s, Republic was gone, having merged with another company. Grumman - whose last major military aircraft was the F-14, a $50 million Navy plane - saw its defense contracts shrink as Washington cut defense budgets when the cold war ended.
The E2C, an early warning plane, is the last line to be manufactured at Grumman's massive 1.5-million-square-foot plant in Calverton, N.Y. The company will make six E2Cs in Calverton this year.
``When the last plane rolls off sometime this year, that will be the end of our manufacturing at Calverton - and the end of an era,'' says Robert Harwood, a Grumman vice president.
Grumman will close five facilities on Long Island, including the Calverton plant. The plan is designed to save the company $600 million over five years. Grumman currently employs 17,900 people, but that number will be reduced by 500 workers by the end of 1994. In 1988, when it was at its peak, Grumman employed 33,000 people nationwide. The company also made the lunar landing module used by Apollo astronauts.
Manufacturing at the Calverton plant will shift to Grumman facilities in St. Augustine, Fla., and Lake Charles, La. Other nonmanufacturing facilities on Long Island will be consolidated into Grumman's headquarters in Bethpage, N.Y. Grumman insists that it will remain in Bethpage.
Grumman is a case study of the massive restructuring taking place within the United States defense industry and the need to shift manufacturing away from high-cost, high-tax states such as New York, Mr. Harwood says.
MANY defense manufacturers continue to post profits. The industry is expected to have earnings growth of about 10 percent this year. But thousands of workers are being let go. Many companies are seeking nondefense work.
Grumman currently has a backlog of $6 billion in contracts. Company officials say 1993 earnings, which have not yet been announced, will be in line with the $3.49-a-share earnings in 1992.
Instead of focusing on new military aircraft, Grumman is undertaking electronic work, such as installing ground-to-air radar on older aircraft. It will also modify existing Grumman aircraft.
The company also builds trucks for the US Postal Service, has a sizable data-processing business, and conducts research on Maglev, a form of rail transport in which the cars rely on magnetic levitation and do not touch the tracks.
Wall Street is still enthusiastic about Grumman.
Grumman stock, listed on the New York Stock Exchange, has been trading in the $42-a-share range and has posted gains. Gary Reich, who follows the defense industry for Prudential Securities Inc., gives Gumman a ``hold'' rating, advising investors to keep the shares that they currently own.
Shifting manufacturing away from Long Island will result in higher taxes for school systems and towns located near existing Grumman facilities, says Dr. Wunderlich of the Long Island Historical Journal.
Additionally, some small businesses, including subcontractors, also are expected to be hurt by the restructuring, he says.