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General Dynamics sees big savings from merging combat systems units
July 15, 2013 / 5:35 PM / 4 years ago

General Dynamics sees big savings from merging combat systems units

WASHINGTON (Reuters) - Citing waning demand, weapons maker General Dynamics Corp (GD.N) on Monday said it would consolidate its two combat systems businesses and close the Charlotte, North Carolina, headquarters of one of them by the end of 2013.

A U.S. marine soldier directs a M1A1 battle tank during the Combined Joint Logistics Over The Shore (CJLOTS) exercise, as a part of the annual joint U.S. and South Korean exercise "Foal Eagle", at a seashore in Pohang, about 370 km (231 miles) southeast of Seoul April 22, 2013. REUTERS/Kim Hong-Ji

General Dynamics spokesman Rob Doolittle said the consolidation would result in significant savings for the company, although he declined to give any specific estimates.

The company said the decision followed a comprehensive review of its combat systems business group, given changing demand in some markets and increasing competition.

The move comes as arms makers brace for further cuts in military spending. Defense Secretary Chuck Hagel last week warned that the Pentagon would have to cut hundreds of weapons programs and lay off civilian workers unless Congress acts to stop $52 billion in mandatory spending cuts for fiscal 2014. Hagel said the cuts could reduce spending on procurement and research and development by up to 20 percent.

Mark Roualet, executive vice president of General Dynamics’ combat systems group, said consolidation was the best way to maintain the competitiveness and profitability of the sector.

Michael Wilson, president of General Dynamics Ordnance and Tactical Systems, will lead the combined organization, which will be headquartered in St. Petersburg, Florida.

As a result, the Charlotte headquarters of General Dynamics Armament and Technical Products would be closed. That facility has about 90 workers, and some would likely find jobs elsewhere in the company, Doolittle said. Further job impacts from the consolidation were not yet clear.

General Dynamics builds M1A1 tanks, as well as high-performance composite structures for the commercial, aerospace and defense markets; and a wide range of axles, suspension systems and components for commercial trucks, military vehicles and industrial off-highway machines. The company is also a leading maker of large, medium- and small-caliber munitions, propellants and force-protection products.

The two units employ about approximately 6,000 workers in the United States, Canada and elsewhere.

Reporting by Andrea Shalal-Esa; Editing by Phil Berlowitz

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