Fairchild Republic Co., a division of Fairchild Industries Inc., announced today it will close its main aircraft plant here by the end of 1983, putting more than 1,000 employes out of work in a community already hard hit by industry layoffs.
Mack Truck Co., this area's largest employer, recently laid off several hundred employes, and its work force of 2,300 is only half its 1979 size.
Fairchild, Hagerstown's second largest employer, said the decision to close the huge facility was made after the Boeing Co. recalled a $308 million subcontract for work on Boeing's giant 757 aircraft.
The decision followed failure of the two companies to renegotiate the subcontract after Boeing had made at least eight changes in scheduled delivery of components because of sharply reduced demand for the 757, said Donald B. Rassier, president of Fairchild Republic.
Fairchild officials met with local and state officials earlier today after notifying employes of the decision to close the plant.
Ironically, Fairchild Industries had assured Maryland officials earlier this year that it planned to continue a major presence in the state despite a decision to move its corporate headquarters to Dulles International Airport in Northern Virginia.
Fairchild Republic had been a prominent factor in the Hagerstown community since 1929, but had operated the existing aircraft plant for the last 11 years.
Rassier said Boeing's attempts to stretch out work on the 757 would have resulted in a major reduction in production at the Hagerstown plant, where the normal workload already has been cut. That, combined with Fairchild's phasedown of production of the A10 military aircraft, forces the company to close its plant here, Rassier explained.
Rassier said termination of the 757 program will begin this week and that Boeing will probably take 60 to 90 days to ship parts back to Wichita, Kan., and Renton, Wash.
Fairchild had announced on Aug. 16 that it planned to lay off about 400 employes because of the planned phasedown in production of the A10. Fairchild has all but completed work on the original contract with the Department of Defense calling for delivery of 727 of the A10s.
Fairchild will continue to operate a facility nearby where various components are bonded, but its work force will drop to about 500 by March.
The chances of reopening the main plant here appear bleak.
"We see no work that will come along very shortly to fill that gap," Rassier said, adding that the plant will be leased or sold.
About 60 percent of the main plant's 1.5 million square feet are being used on the Boeing and A10 programs, Rassier added.
Although Fairchild officials have no immediate plans for utilizing the plant, Rassier said he and others are optimistic about possible sales of the A10 to at least three foreign governments--Egypt, the United Arab Emirates and Thailand.
At the same time, Rassier added that prolonged negotiations with those governments would make it extremely difficult to restart operations in a plant that will have been closed for several months.
Boeing's decision to pull back reflects a sign of the times, Fairchild officials said: large transport aircraft aren't selling as well as manufacturers and carriers had anticipated.
And it is apparent, Rassier asserted, that Boeing has to pull back on orders to other subcontractors as well.
"To my knowledge, Boeing has sold only 63 of the first 200 757s" planned, Rassier said.
A Boeing spokesman, John Wheeler, said Boeing had received 129 orders for the 757, fewer than the company had hoped for because of the recession and its impact on airline earnings. Instead of the 60 to 100 airplanes a year that Boeing would have expected to turn out in normal times, only about 45 of the 757s are in production this year, he said.
The performance record of the 757 has been good and interest has increased among airlines as the recovery has gotten under way, Wheeler said. "The airlines are happy with it and would love to have more, but with their earnings down it's very difficult to absorb more capacity," he said.
Boeing denied other reports that Eastern Airlines, the only U.S. carrier using the 757, was considering delaying delivery of some of the planes it had ordered.