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October 30, 2014

Last program year (2013–2014), the San Diego Workforce Partnership (SDWP) began offering services to help companies avert layoffs through the Employee Retention Program, a pilot project coordinated by SDWP’s Rapid Response team. The program was developed specifically to retain existing jobs in San Diego in the manufacturing industry sector. SDWP consultants work with employers who seek alternative solutions to laying off employees, as retaining an existing worker can save costs associated with severance, loss of historical knowledge, and reduced staffing.

Space Micro—a space and defense contractor that designs and manufactures satellite and missile avionics and communications electronics—was one of the first companies placed in the Employee Retention pilot program. Space Micro is recognized as an innovator in engineering models and one-of-a-kind electronics cards and boxes.
However, the company was struggling with scaling up their manufacturing volumes, production and manufacturing quality issues. Space Micro’s sales shifted from $11 million in 2011 to $6.4 million in 2012. As a result, the company was at risk of losing 18 employees.

To sustain the business and retain at-risk jobs, Space Micro needed to demonstrate the ability to manufacture, test, qualify and deliver in larger volumes, with acceptable quality, in order to be a continual supplier for its prime customers. However, its processes and systems were not substantially matured or well-documented, putting it at risk of losing those customers.

Additionally, a recent audit identified several areas where Space Micro must improve within six months. These areas included:

  • Enhancing Quality Assurance program to meet all of the AS-9100 requirements
  • Improving inventory procedure and increase the accuracy of inventory cycle counting
  • Installing a formal vendor rating system
  • Upgrading manufacturing travelers for more data such a slot date codes
  • Adding Standard Operating Procedures (SOPs) for incoming inspection and kitting of parts

If these problems were not addressed, the company’s relationships with its customers would be threatened.

After Space Micro entered the Employee Retention Program and received funding from SDWP, the contract provider, California Manufacturing Technology Consulting (CMTC), provided Space Micro with the technical assistance to implement process improvements in both its quality systems and manufacturing/inventory processes and systems.

CMTC’s assistance helped address the audit findings and also made improvements in the company’s manufacturing processes to improve quality and efficiency. 

With help from the Employee Retention Program, Space Micro was able to retain 15 at-risk jobs, and the company grew substantially. In January 2014, Space Micro expanded its building space, and in a recent San Diego Business Journal article, Space Micro announced that it will move into a neighboring space with 20,000 square feet, doubling the size of its design and manufacturing quarters. Further, employment increased to 65 employees (adding seven new jobs to the company) and is expected to continue growing another 25 percent. Space Micro now reports that it has projects for more than 30 satellite programs in the pipeline. The projects range in cost from $25,000 to $1 million.

CMTC is the current Employee Retention Program funded partner. SDWP works with this consulting group to identify manufacturing companies that are at risk of laying off workers due to inefficiencies. Funding for the program comes from the Workforce Investment Act (WIA) through U.S. Department of Labor Rapid Response funding.

For more information about the Employee Retention Program, visit

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