General Dynamics (GD.N) NASSCO, a primary constructor of ships for the U.S. Navy, warned about 1,040 employees on Monday of indefinite layoffs that may come in late April due to uncertainty created by the automatic U.S. budget cuts that took effect last week.
The warnings come as military contractors weigh uncertainties over scheduled maintenance and repair work that may be put on hold as the federal government makes $85 billion in spending cuts.
The U.S. Worker Adjustment and Retraining Notification Act (WARN) requires most companies with 100 or more employees to give notification 60 days in advance of mass layoffs or plant closings.
Military contractors appear to be the hardest hit by the cuts because a large part the reductions are expected to come from Defense Department spending.
Based in San Diego, NASSCO is a wholly-owned subsidiary of General Dynamics and the largest full-service shipyard on the West Coast.
It has built 63 ships for the U.S. Navy since the 1960s. The company's three shipyards are in Mayport, Florida, near Jacksonville; Norfolk, Virginia; and San Diego — cities that rely heavily on the military for jobs.
The company did not respond to requests for comment.
Among the 1,040 NASSCO workers who could be affected by layoffs, 665 are in the Jacksonville area, according to WARN notice databases, and 375 in San Diego.
NASSCO is at least the second company with strong ties to Mayport to notify workers of possible layoffs because of the spending cuts.
Units of BAE Systems (BAES.L) issued layoff notices last week. Its ship repair division notified more than 100 employees in the Jacksonville, Florida, area and 302 San Diego employees that layoffs could be on the horizon, according to WARN notice databases in Florida and California.
The company also issued layoff warnings to more than 1,300 employees at its San Diego ship facility and an undisclosed number in Norfolk, Virginia, according to the databases.
(Additional reporting by Jennifer Merritt; Editing by Mohammad Zargham)