Lockheed Martin to cut 4,000 jobs as U.S. defense spending falls
ATLANTA (Reuters) - Lockheed Martin Corp (LMT.N), the world's largest defense contractor, said on Thursday it plans to slash 4,000 jobs and shutter plants in several states to reduce costs in the face of declining U.S. defense spending.
The Bethesda, Maryland, weapons maker will close the affected facilities by mid-2015 to achieve job cuts that amount to more than 3 percent of its global workforce.
"Our customers face an increasingly complex global security environment with rapidly shrinking budgets," Lockheed chief executive officer Marilyn Hewson said in a memo to employees entitled "Making Difficult Decisions to Secure Our Future."
The plants being closed include operations in Akron, Ohio, that make parts for radar and surveillance systems; Newtown, Pennsylvania, which makes communications satellites; Goodyear, Arizona, which handles software development for sensors; and Horizon City, Texas, which performs final assembly of missiles.
The company said four buildings at its Sunnyvale, California, space systems operation will also be shut.
The plant closures will eliminate 2,000 positions, Lockheed said, while "operational efficiency initiatives" will pare another 2,000 in the information systems and global solutions, mission system and training and space systems business segments by the end of 2014.
Certain work will be relocated to other Lockheed facilities such as Denver and Valley Forge, Pennsylvania.
A number of defense companies have shed non-core divisions, consolidated facilities and cut jobs in recent years to cope with revenue declines as the United States, the world's largest weapons buyer, pares its military budget.
The Pentagon, Lockheed's biggest customer, is bracing for one trillion dollars in spending cuts over the next decade as part of the 2011 Budget Control Act and the U.S. sequestration process.
Last month, Britain's BAE Systems (BAES.L) said it would close a Texas facility that builds combat vehicles and cut more than 300 jobs.
"As sequestration goes forward in 2014, we do expect to see more layoff announcements, more consolidation as companies at the top of the supply chain are forced to restructure their business," said Dan Stohr, spokesman for the Aerospace Industries Association, an industry lobbying group.
Lockheed, which builds F-35 fighter jets, satellites, missile defense equipment and warships, among other things, said last month that uncertainty about future U.S. budgets was limiting its ability to make needed investments. The downturn in government spending was holding back information technology sales, it said.
Even so, the company managed a 16-percent jump in earnings per share in the latest quarter and its stock has reached all-time highs.
Thursday's move reflected ongoing efforts to trim costs, and followed a review of workload projections, the company said. Since 2008, the company has pared its workforce by 30,000 employees to 116,000 worldwide.
Peter Arment, an analyst with Sterne Agee, said in a note to clients on Thursday the additional cost-cutting at Lockheed would help profit margins as sales get pressured. Lockheed has forecast that total sales will decline in 2014.
"For now, (Lockheed) remains one step ahead of the budget downturn," Arment said.
Lockheed shares have risen about 49 percent this year. They rose 0.4 percent on Thursday, to $137.85.
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