Pratt & Whitney employees at first made light of the cost-cutting review called the “activity value analysis.”

“Have you seen the AVA salute?,” one employee would joke, making a slashing motion across his throat.

But the review, which will mean the loss of nearly 600 jobs by late 1989, was serious business for Pratt’s future in Palm Beach County and its growth in the military jet engine business.

As part of a cost-cutting mission to become more competitive, Pratt announced last Thursday a two-step layoff that could decrease employment from 8,200 this year to about 7,600 by the end of next year. Three hundred salaried workers at the engine development plant are immediately affected.

Northern Palm Beach County has weathered Pratt’s cyclical business before. For example, in one year in the late 1960s, employment fell from 6,143 to 4,490. Then during a four-year period in the late 1970s, employment increased 77 percent from 4,590 to 8,100. Although employee layoffs are rarely tied to the loss of one military contract, the overall defense business bounces up and down.

Business community members and development officials say they expect little backlash from this layoff because it is relatively small. In fact, they say a more efficient plant strengthens Pratt and its future growth in the county.

“I don’t see any disturbance,” said Donald Walker, chairman of the Palm Beach County Development Board.

Walker said the company is somewhat protected from drastic financial harm because Pratt and GE are the only two defense contractors that develop the military’s fighter jet engines.

“The government looks over their shoulder. … They can slap their wrists, but I don’t see that government can afford to let either one suffer,” he said.

Walker is one of many developers whose project hinges on the continued health of Pratt. He is president of The Palm Beach Park of Commerce, a business park on Beeline Highway across from the plant that is trying to attract Pratt suppliers as tenants.

But other businesses in northern Palm Beach County are not as dependent on Pratt for their lifeline.

Gary Krielow, president of the Northern Palm Beach Chamber of Commerce, said 10 years ago the area was hurt when both Pratt and RCA, which had a plant in Palm Beach Gardens, laid off about 1,000 employees. Krielow said now northern Palm Beach County has a larger mix of businesses and can better withstand a job loss.

Since Pratt opened its plant in 1957, the northern cities of Palm Beach County have undergone great change.

For awhile, Pratt was nearly alone in the far reaches of northwestern Palm Beach County, the 7,000-acre campus on the edge of the Everglades. Driving out to the site where Pratt’s plant was being built in 1957, there was no Beeline Highway and no paved roads on the site.

“When you went from one area to another you never knew if you’d make it through the swamp,” retired employee Ernie Carnahan is quoted as saying in Pratt’s 25th anniversary publication.

The defense contractor spurred residential and commercial development. Suppliers to Pratt settled in northern Palm Beach County as well as thousands of support services. It is one of the hottest areas in South Florida for residential development and still affordable enough to attract new commercial development.

“The whole area is really exploding,” said Barbara Allen, a real estate analyst for Sunbelt Research Associates in Jupiter.

The burgeoning population has attracted such developments as The Gardens, South Florida’s largest regional mall, which is scheduled to open in October.

“With The Gardens opening up and the new roads, it’s becoming a sought- after area,” Allen said. “The development is like little mushrooms growing. If you don’t drive through that area every two months you’re going to be surprised.”

Much of the growth has been a result of the completed I-95 link in Palm Beach Gardens to the north as well as the four-lane expansion of Beeline Highway.

Despite the growth, Pratt’s layoff could result in a large number of homes on the market in north county.

But Lorraine Paduano, branch manger for Coldwell Banker’s Palm Beach Gardens office, said she expects many employees will find new jobs in the area.

“Pratt has had layoffs before, and it hasn’t had an impact on the market.”

If there are more homes on the market, “it will be a boon to the area,” Paduano said. “We have lots and lots of buyers right now.”

Some say Pratt’s layoff, coupled with IBM’s announcement last month, could pose an image problem for the county. IBM announced in June that it would move its personal computer manufacturing from Boca Raton to Raleigh, N.C., which will affect 1,600 employees.

“Anytime we lose industrial jobs it has an impact,” said Ron Simmons, president of the Palm Beach County Development Board, which recruits businesses to the county.

One positive result is that there is a larger pool of qualified labor because of cutbacks at Pratt and IBM.

“We have a darn good argument now” for high-tech companies looking to locate in Palm Beach County, Simmons said.

PRATT & WHITNEY

— LOCATION: 7,000-acre plant off Beeline Highway, northwestern Palm Beach County

— BUSINESS: Develops, designs and tests military jet engines; develops and produces rocket engines

— EMPLOYEES: 8,200

— LAYOFF: 303 workers initially; about 600 positions by the end of 1989

— JOBS CUT: Range from clerical to executive level

— OUTLOOK: Pratt & Whitney said the layoffs would put the company in a more competitive position to bid on military contracts against rival General Electric.