Lockheed Martin has streamlined its aeronautical and space systems businesses and is to eliminate more than 2,800 jobs in a bid to reduce costs by $200 million a year. The US giant saw net profit drop 62% to $382 million last year. It hopes the restructuring will help improve performance. Turnover totalled $25.5 billion, down 3% on 1998.
The aircraft business has been consolidated from three companies into one, Lockheed Martin Aeronautics, based in Fort Worth, Texas, and led by Dain Hancock. Space activities have been merged into Lockheed Martin Space Systems, based in Denver, Colorado, and headed by Albert Smith.
Within the Aeronautics company, the Fort Worth and Marietta, Georgia, plants will focus on aircraft production, while the Palmdale, California-based Skunk Works will be focused on advanced development. Four subassembly plants will report directly to the new company. Most job losses will come in Aeronautics, with a workforce reduction of 2,500 spread equally across the three main plants. Another 2,000 jobs are already been cut at Marietta.
The streamlining, to be completed within 18 months, is expected to generate annual savings of $160-175 million, while an immediate workforce reduction of 300-400 in Space Systems should save $30-40 million a year. The cutbacks will hit management, administration and engineering functions.
The restructuring is a move "in the right direction, particularly on the aeronautics side", says Merrill Lynch analyst Byron Callan. "The only surprise is that it didn't happen a long time ago." He believes a USAir Force decision to bring forward C-130J orders saved the Marietta plant from closure.
Callan says the outcome of the competition for a large classified US space programme, due to be awarded by 2001, will decide the fate of the Sunnyvale, California, satellite plant.
• Pratt & Whitney will shed up to 1,700 employees this year due to a downturn in engine production that is expected to last for two or three years.
Source: Flight International