Boeing warned this week it will lay off as many as "several hundred" workers in its satellite division by the end of the year. Most of those employees work in a facility in El Segundo.
Though the aerospace giant cited "the overall defense spending downturn" among the factors, the job cuts are less a sign of a struggling aerospace industry and more a ripple effect of the shut down of the Export-Import Bank.
One of Boeing's customers, Bermuda-based ABS Holdings had ordered an all-electric propulsion satellite from Boeing but had to back away when it couldn't get financing for the order from the Ex-Im Bank. The U.S. government-backed bank stopped issuing loans in early July when Congress failed to reauthorize funding for it. While supporters called the bank an important engine for the economy, critics called it corporate welfare for big companies...like Boeing.
"The Ex-Im Bank provides critical support for many Boeing commercial satellite exports," said Boeing spokeswoman Linda Taira in a statement. Without it, she said, "Boeing is operating at a significant disadvantage in overseas campaigns against foreign aerospace companies that are supported by their governments’ official export credit agencies."
Robert Kleinhenz, chief economist with the Los Angeles County Economic Development Corporation says Boeing may be one of the larger more recognizable companies adjusting to life without the Ex-Im Bank, but there are others. He says the satellite industry is poised for growth in the coming years, and that could favor businesses in Southern California.
"It’s not domestic growth that will drive this industry, it is selling to other countries and businesses outside the U.S.," Kleinhenz told KPCC, pointint out that the Ex-Im Bank has played an important role in those sales. "Some can refer to this as corporate welfare, but there is a return in the sense that jobs are grown, or at least saved."
As for the health of Southern California's aerospace industry, which includes satellites and navigation systems, Kleinhenz acknowledged it's the not the job-generator it was during the cold war, but it is still viable and prominent in the region. He says the industry accounts for about 65,000 jobs in Los Angeles County, and that number has held steady for the last three years.
"We've been hearing over the last several years about job losses with this company or in that division and so on," said Kleinhenz. "At the same time, we've seen companies like Virgin Galactic and SpaceX and smaller companies that are less visible add to their ranks."