Another U.S. manufacturer is leaving high-cost California and moving to the South, a region whose cheaper labor and lower taxes have lately helped it become an industrial hub.
Aerojet-Rocketdyne (AJRD) is leaving Sacramento, California, a longtime hub of the aerospace industry, CBS Sacramento reports. The defense and aerospace company announced Monday it is closing its Rancho Cordova manufacturing plant by 2019 and eliminating or moving nearly 1,100 jobs.
The company has previously called its Sacramento-area site “one of its high-cost locations,” the Sacramento Bee reported.
In recent years, manufacturers have moved operations from states with high rates of union membership to parts of the U.S. where labor is less organized and where laws limiting union funding make it harder for workers to unionize.
Aerojet employees left work for the first time Monday with the startling announcement. As they drove past the company gates, one stopped for a brief interview.
“Can you tell me what the mood is there with the announcement?” CBS13’s Steve Large asked the employee.
“It’s not good, people aren’t feeling very good about it,” the worker replied.
For the Sacramento region, it’s a loss of a major, high-profile private employer. The company has a rich American history; its engines were used in NASA’s Apollo program, which led to the first moon landing. The site that houses Aerojet has been in use since the 1950s.
“When people talk about large, successful, companies in the region, Aerojet always ranks near the top,” Sacramento State finance professor Sanjay Varshney said.
Aerojet-Rocketdyne has downsized since the end of the space race, but remained one of Sacramento’s only publicly traded companies. The company moved its headquarters from Sacramento to Southern California last year in a move that foreshadowed its latest relocation plan. Its decision to leave now is a clear sign to Varshney this region is not doing enough to attract business.
But for Huntsville, Alabama, where Aerojet is shifting its defense-related manufacturing facilities, it’s a clear win. The region will gain about 800 jobs from the move, AL.com reported. Other manufacturers, including Boeing, DynCorp, Honeywell and Raytheon all have a presence in Huntsville, a city of 190,000 people near the border with Tennessee.
“North Alabama remains the nation’s epicenter for aerospace and defense research, development and production,” Sen. Richard Shelby (R-Ala.) told AL.com.
The Aerojet-Rocketdyne CEO issued a statement saying the move would save the company $85 million.