June 29, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Thousand Oaks, Calif.-based Amgen (AMGN) is currently auctioning off its equipment from its campus in Longmont, Colo.
It expects to shut down the 70-acre facility by the end of the year and is selling the entire package for $85 million. The campus includes six buildings that make up a manufacturing building, utilities, two quality control laboratories, a warehouse and an administrative building. Meanwhile, excess equipment, from microscopes to hazardous materials bags, are being auctioned off.
“Amgen is using Heritage Global Partners for its online auctions of equipment,” said Kristen Davis, Amgenspokeswoman to Times-Call Business. “The auction includes excess equipment from the Colorado facility as well as other sites.”
In July 2014 Amgen announced it was cutting 2,900 jobs and closing facilities in Washington state and Colorado. The goal was to cut costs and focus on new drug development. There are currently about 335 staffers still remaining at the Colorado sites as it continues to shut down.
In a 2014 Los Angeles Times article, Ravi Mehrotra, an analyst with Credit Suisse in New York, said at that time, “WhatAmgen clearly is trying to do is catch up, from an operational and structural cost basis, with its peer group. This is addressing the criticism that it is the least-efficient company from a structural perspective.”
However, on April 28, 2015, the company announced it had started hiring research scientists and production engineers in Boston as part of a 100-person staff expansion expected to expand its presence in Cambridge, Mass. and South San Francisco. It also reportedly hired an additional 75 people for its Kendall Square location in Cambridge.
The company expects to improve margin costs by 15 percent with another 1,100 job cuts added to the 2,900 it reported in mid-2014. In a statement, the company indicated it will see a total enterprise annual savings of up to $1.5 billion by 2018.
Benzinga recently reported that investors interest in short selling in the biotech arena seem to prefer Amgen over competitors Gilead Sciences, Inc. (GILD) and Illumina (ILMN). About 10 of 20 analysts polled by Thomson/First Callrecommended buying shares of Amgen, with the other 50 percent saying to “Hold.” The mean price target was about 12 percent higher than its current share price. The company has a market cap of about $120.1 billion and a 2.0 percent dividend yield.
Amgen stock’s current price is $157.05. Overall, trading prices have been relatively flat since a high of $171.64 on Dec. 8, 2014. Prior to that shares traded for $115.39 on July 17, 2014 and $130.45 on Oct. 16, 2015.
Analysts suggest that the growth in stock prices has more to do with the company’s pipeline, as opposed to its efficiency efforts and layoffs. Pipeline interest include Blincyto for the treatment of acute lymphoblastic leukemia (ALL), Corlanor, for heart failure, Vectibix for wild-type KRAS metastatic colorectal cancer and AMG334 for episodic migraine.
One there were so many workers building military cargo jets at Boeing’s sprawling plant in Long Beach that employees put flags on their cars to find them in the vast parking lot.
Now the parking lot is nearly empty. There are no “going out of business” signs posted out front, but this month the company is holding its first auction of the plant’s mammoth equipment.
The 25-acre factory that assembled 279 of the workhorse C-17 air haulers is being disassembled.
Workers are putting the final touches on the last eight planes, but already four of the five manufacturing bays sit nearly silent.
During production, employees wore earplugs because of the clattering racket. Now birds sing from the rafters.
“The first time I heard the birds, it was a reality check,” said Tiffany Pitts, a Boeing Co. spokeswoman who took The Times to see the equipment being auctioned off.
“Boeing is not going away in California,” Pitts added, “but that doesn’t change the sad fact that this plant is closing down.”
The plant’s closure is a painful loss for Long Beach’s economy and the end of an era in which Southern California’s aerospace industry, and its high-paying factory jobs, helped build a strong middle class.
The C-17 is the last major military or civilian aircraft to be assembled in California — although there is hope for the future.
Just 20 miles north, upstart SpaceX is building rockets, engines and spacecraft in Hawthorne for a fast-growing list of government and commercial customers. Virgin Galactic recently announced that it would build its new satellite-launching rocket in Long Beach. The Pentagon continues to buy drones built in Southern California. And the state could win a big chunk of the work on a new stealth bomber the Pentagon has planned.
Michael Conway, Long Beach’s economic development director, said officials are working with Boeing as the company decides what to do with the site, which years ago employed as many as 6,000 workers.
“It’s been like a big brother to the city,” Conway said of the plant. “It’s a very sad event.”
The Long Beach plant was built in the late 1980s by Douglas Aircraft Co., which won the Air Force contract to build the C-17 Globemaster III. Douglas then became McDonnell Douglas Corp. In late 1996, Boeing announced that it was purchasing its longtime rival.
The factory is part of what was once an immense aircraft manufacturing complex dating to World War II. Tens of thousands of people worked in the facility’s hangars, building planes like the MD-80 jetliner, the Boeing 717 and earlier, during the war, the B-17 bomber.
Those other hangars were shut down long ago. Boeing sold much of the site in 2012 to Sares-Regis Group of Irvine. Sares-Regis has been leasing parcels to companies including Mercedes-Benz, which recently built a large facility there.
The wide-bellied C-17 can carry 80 tons of troops and supplies. Equipment as large as the Army’s M-1 Abrams tank can roll through its rear door.
The four-engine cargo hauler can take off and land in remote regions that lack modern runways. It is frequently used on disaster relief and medical evacuation missions.
With wars in Afghanistan and Iraq, the Pentagon has flown the C-17 more than it planned.
The Air Force bought 223 of the planes, the last delivered in 2013. In recent years, Boeing has sold several dozen more to foreign militaries, but not enough to continue production. The company announced in September 2013 that it would close the line.
In a report last fall, Richard Aboulafia, an aerospace analyst with Teal Group, wrote that the Air Force could find in a few years that it needs more C-17s but it has no production line.
When the Air Force began C-17 procurement,” Aboulafia explained in an email, “it hadn’t intended to fight two wars on the other side of the planet.”
Ed Gulick, an Air Force spokesman, said no C-17 is expected to be retired until the 2040s.
He said the Air Force was working with Boeing to identify equipment and tools in the plant that are needed to sustain and repair the fleet over the next decades. A 2012 contract allows the government to pay up to $500 million to Boeing for the equipment, parts and data needed to keep the air haulers flying.
Boeing hired an auction firm to collect bids on two dozen of the plant’s machines and tools. Included is the elephantine equipment making up the fuselage assembly line, which built the planes at a clip of up to 16 a year, according to the auction catalog.
Another for-sale item: a Gemcor Drivmatic fastening machine that drills and installs rivets with a force of 50,000 pounds and then shaves the top so the rivet is flush with the wing’s skin. The robot installs rivets at a rate of six to nine a minute.
Also on the block is an automated wing spar assembly tool that uses electromagnetic energy to install fasteners. In addition, two industrial vacuum systems, two Siemens control centers and various spare parts are for sale.
The auction firm, Heritage Global Partners of San Diego, said it had received interest from around the world.
David Barkoff, the firm’s sales director, called the auction “a phenomenal opportunity” for aerospace, maritime, automotive and other manufacturers to buy tools that are in “great condition.”
The auction by sealed bidding closes June 23.
On a tour of the closed sections of the plant in late May, much of the machinery was roped off with yellow “Caution” tape.
Signs posted near some machines read, “Production Complete. Do not enter.” A faint smell of grease and metal lingered in the air.
Boeing was Southern California’s largest private employer at one time. But the aerospace giant has cut its California workforce every year since 2001, according to its records.
At the beginning of the year, Boeing had 17,566 employees in the Golden State — half of the 35,000 employed here 10 years ago.
The company has been moving operations to states with lower taxes and labor costs, including South Carolina, Alabama and Oklahoma.
So far this year, Boeing has reported the expected layoffs of 739 California workers to the state.
Those layoffs included 397 in Long Beach and an additional 189 in El Segundo, where Boeing builds satellites. The company reported 153 layoffs in Huntington Beach, where its programs include a Phantom Works research team that focuses on secret “black budget” projects for the Pentagon.
In a statement, Boeing said that often workers receiving those layoff notices are reassigned or take voluntary retirement. The layoffs, the company said, were necessary to manage costs and increase productivity. It blamed caps on Pentagon spending required by automatic budget cuts known as sequestration.
Boeing announced last year that it was moving 1,000 engineering positions in its commercial aircraft division to Seal Beach and Long Beach, which has helped offset some of the California reductions. The company said it was “committed to preserving as much of our skilled California workforce as possible.”
Randy Sossaman, president of United Auto Workers Local 148, said there are now fewer than 400 union members working at the C-17 plant. Over the last year, Boeing has been issuing layoff notices about every two weeks, Sossaman said. Each time, he said, 25 to 70 people have been let go.
Many of the workers have retired. Boeing says some have found positions elsewhere in the company, although Sossaman said the firm is not currently offering such transfers.
Boeing’s C-17 program manager, Nan Bouchard, said production on the last C-17 should be complete before year’s end.
Executives don’t know what they will do with the factory, Bouchard said. There are no plans to build another plane or anything else there.
Boeing, she said, may put the site up for sale.
By Andrew Edwards, Press-Telegram
LONG BEACH >> Boeing Co. will auction off industrial equipment previously used to manufacture the C-17 Globemaster III military transport aircraft, according to a San Diego company that announced Monday it will accept bids on behalf of the aerospace firm.
Heritage Global Partners, a San Diego company, stated it will accept sealed bids for Boeing’s equipment through June 23.
The equipment up for auction includes a Broetje-Automation robotic lexible assembly cell, which is a large piece of equipment designed to assemble fuselage sections for big aircraft.
Boeing’s production of the Globemaster is expected to come to a close by year’s end. Boeing employees completed the last “major join” of the aircraft by combining its fuselage, wing, tail and nose assemblies in February. The final aircraft was the 279th C-17 Globemaster to be produced in Long Beach.
The first such major join took place in 1990.
Boeing is still selling the final C-17s to foreign air forces. Australian Prime Minister Tony Abbott revealed this past Thursday that his country would purchase two C-17 aircraft. Boeing had only five aircraft without buyers as of the Australian announcement.
Boeing announced its decision to shut down C-17 production in 2013.
The aerospace company has not made a decision on what will ultimately happen to the Long Beach plant where the C-17 has been assembled, spokeswoman Tiffany Pitts said in an email.
With Boeing’s 25-year-old C-17 Globemaster III factory in Long Beach closing this summer after the last military plane has been delivered, Heritage Global Partners, a San Diego-based company and “global leader in asset advisory and auction services and a subsidiary of Heritage Global Inc.,” announced Monday that by order of the Boeing Company, it is “offering a world-class array of industrial assets used in the manufacturing and assembly of the C-17 Globemaster III.”
The sealed bid sale ends on June 23, 2015 at 3:00PM and will include the sale of parts from the military transport aircraft manufactured in Long Beach since the 1980s.
The C-17 was born when the U.S. Air Force requested a larger transport that could be refueled during flight and also landed on rougher terrain, according to Boeing. The first C-17 fleet became operational in 1985. Boeing announced on September 18, 2013 that it would close the C-17 manufacturing facility this summer.
“This sealed bid sale featuring industrial assets used for Boeing’s C-17 production is a phenomenal opportunity for organizations in the defense and aerospace industries to bid on well-maintained manufacturing and assembly equipment. We have already seen very strong interest and participation from prospective buyers from all corners of the globe and expect that to build until the sale ends in late June,” stated David Barkoff, Director of Sales at HGP, in a statement.
For more information about what is being sold and to bid, click here. The assets are located at 2401 E. Wardlow Rd.
Photo courtesy of Boeing.