San Diego Business Journal Technology: Company Faces Sell Off of Hughes Division by General Motors

Last year the challenge facing the area head of Hughes Network Systems was managing a 40 percent employee turnover.

With the economy slowed, turnover is down to 10 percent and the challenge is different. This satellite communications equipment maker, along with the rest of El Segundo-based Hughes Electronics Corp., is now up for sale.

James Gandolfi, senior vice president and general manager of Hughes' San Diego Division, finds himself continually having to allay employees' fears about the changes around them, while following through for the customer.

It's a balancing act.

The General Motors unit employs 350 people in San Diego, 179 of whom are engineers.

On one floor of Hughes' Sorrento Mesa building, technicians are finishing hundreds of ground-based repeaters for client XM Satellite Radio, Inc.

"We are in the exciting throes of their launch. The date is Sept. 12. And if I survive till Sept. 12, I will enjoy it," said Gandolfi, who has a ready laugh.

"The customer is stressing out their launch," he explained, "and as the provider of equipment, it does float downhill a little hard right now."

There are hundreds of repeaters, each a little smaller than a household washing machine, on the floor. A note taped to one has a smiling stick figure, with the message that this group of 10 is done.

As the name implies, satellite radio transmits its signal from the heavens. But tall buildings can foil the signal. So XM is putting repeaters in 70 metropolitan areas. Five units are in San Diego County. One is on Downtown's Union Bank building.

Last Hurrah

Hughes' $112 million contract calls for the company to produce 1,450 200-watt repeaters for XM, and 125 high-powered repeaters. Those broadcast at 2,000 watts.

The repeater order will be this factory floor's last hurrah, Gandolfi said. Part of the area will be turned into a room for large meetings.

Across the border, Hughes operates a maquiladora that employs 800 people.

That factory and a second in Switzerland are working on an order for 200,000 satellite telephone handsets for Thuraya Satellite Telecommunications Co. of Abu Dhabi, United Arab Emirates. Thuraya plans a regional system covering Europe, northern Africa and a portion of Asia stretching to India.

Hughes also makes equipment for DirecTV, and manages satellite data transmission for a variety of private companies, including gas stations.

The last few years have seen General Motors spin off parts of Hughes. The company sold its military business to Raytheon Co. and its satellite-building arm to the Boeing Co.

Rupert Murdoch's News Corp. is now negotiating to buy Hughes Electronics. EchoStar Communications Corp. of Littleton, Colo. is also making a bid.

"What we tell our employees is, 'The best thing to do is be successful at the business we want, and we'll take care of ourselves. If we're doing our job, we'll be fine,'" Gandolfi said.

At least the days of high turnover are over. Managing a business with 40 percent turnover is not something Gandolfi would recommend.

"In the technology world it's almost impossible," he said, describing the difficulty of getting a second engineer to pick up a project where a departed engineer has left off.

The primary job, though, may be keeping morale high among the employees left behind.

"There's this whole sense that the world's coming to an end for the people that are staying here," he said. Gandolfi found he had to turn his sales skills toward convincing his remaining employees that the company is established, growing, well-equipped to take risks, and a good place to be.

At the same time, he had to convince the customer the project was going all right, and had to hit the customer's launch windows accurately.

Last year's job was to "keep the pipelines full" of new employees, Gandolfi said. "We still do recruiting, but we're now certainly more targeted for specific areas."

Though it's been a hair-raising time, the days of high turnover did have their advantages.

"It's almost like a new company," Gandolfi said.

"And when we want to start doing things differently, it's really fun. With that kind of mix , I mean, when we've got 40 percent turnover , half of our people are new. And breaking down 'How was it done last time?' is easy," Gandolfi said, his laugh returning, "because half of them don't know!"