Graham Warwick/ATLANTA

LOCKHEED MARTIN'S space sector will bear the brunt of a consolidation plan intended to save $1.8 billion a year through the elimination of 12,000 jobs and the closure of 12 plants and laboratories over the next five years. The plan will cost $1.7 billion, the company says.

Four plants involved in spacecraft and launch-vehicle manufacture will be reduced to two, with launcher work concentrated at Denver, Colorado, and satellite work at Sunnyvale, Colorado. Former GE (later Martin Marietta) Astro Space plants in East Windsor, New Jersey, and Valley Forge, Pennsylvania, will be closed.

In contrast, the aeronautics sector emerges from the plan largely unscathed, a result of the consolidation already accomplished by Lockheed following its acquisition of General Dynamics' F-16 business, says vice-president international business-development Michael Smith.

All sectors will benefit from company-wide cost reductions resulting from consolidation of the Lockheed Martin headquarters in Bethesda, Maryland, the combination of internal information systems, centralised procurement of services and increased outsourcing, Smith says. "Lockheed Martin is aiming to be a low-cost producer," he says.

Aircraft maintenance centres at Chino, California, and Tucson, Arizona, will be closed to increase capacity utilisation at the company's Greenville, South Carolina, modification centre, Smith says. A machining plant at Abilene, Texas, will be closed and its work subcontracted.

Other actions include eliminating overlapping research and development and consolidating laboratories from five to three. Ocean, Radar & Sensor Systems programmes will be consolidated into a single plant. Centres of excellence will be created in the space and electronics sectors.

Smith says that the announced plan encompasses all the major merger-related consolidation actions now foreseen. Most will take place over the next two years, beginning with 5,000 job cuts in 1995. These are in addition to 7,000 job losses set in motion by the two companies before the merger, he says.

The company is now conducting "a thorough review" of its business portfolio to determine key niches where acquisitions, partnerships or divestitures are appropriate, Smith says. The company has the resources to make acquisitions in specific niches, and the merger does not preclude the possibility of a larger acquisition, he says.

Smith says that more than 100 consolidation options were considered, beginning before the merger took effect. "Everything was fair game," he says, but the company soon focused in on those options - consolidating space operations and laboratories, and creating centres of excellence, which offered the highest pay-off, in terms of costs versus savings, "in an attractive time period".

Lockheed Martin has sold its remaining holding in Malaysian maintenance centre Airod to Malaysia Helicopter Services (MHS) and local company DZJJ. MHS, parent company of Malaysia Airlines, purchased an additional 19% of Airod for 4 million ringgit ($1.6 million) and now holds 53%.

DZJJ is to buy the remainder of Lockheed Martin's 30% stake and will itself hold 30%, with the balance held by the Malaysian Government. Lockheed originally held 49% of Airod, but sold 19% in late 1994 to abide by the agreement signed with the Malaysian Government when the company was set up in 1985.

Source: Flight International