Lockheed's cuts to add jobs in Md. 8 U.S. facilities are going to be closed, but not Middle River

The giant streamlines

New hires planned even as 1,600 positions are being shorn

November 19, 1996|By Greg Schneider | Greg Schneider,SUN STAFF

Just two days after scoring as a finalist for the richest military contract ever, Lockheed Martin Corp. announced yesterday that it will cut 1,600 jobs and close eight facilities around the country.

The moves had been anticipated as part of the Bethesda company's digestion of Loral Corp., purchased in April for $9.1 billion.

"I'm not quite certain whether they painted [the prospect of cuts] in international orange, but damn near it," said analyst Wolfgang Demisch of Bear, Stearns & Co. in New York. "They've certainly been very outspoken that additional [streamlining] was going to take place as the company restructured."

The cuts will actually bring more jobs to the Baltimore area as offices elsewhere are consolidated here. The company's Aero & Naval Systems facility in Middle River, long rumored to be a shutdown candidate, will grow by about 80 jobs shifted from a South Carolina aircraft components plant.

That plant was the only cut announced yesterday that was unrelated to the Loral acquisition. Other cuts were in New York, Connecticut, California and Arizona.

The company plans to offset all 1,600 job losses through transfers and new hires "associated with new wins such as the Joint Strike Fighter," said corporate spokesman Charles P. Manor III.

The Pentagon announced Saturday that Lockheed Martin and Boeing Co. were finalists to build the Joint Strike Fighter, a vast warplane program that could be worth $300 billion over the next few decades.

That award climaxed a run of billion-dollar coups this year for Lockheed Martin. Even so, the company attributed yesterday's cuts in part to "significantly reduced defense spending."

Analysts said there was no contradiction in the company's rationale.

"The monies for these [new] programs are very far away, and the programs that are being consolidated are the ones that are being funded now and at lower levels than ever before. So it's not as contradictory as it first sounds," analyst Paul Nisbet of JSA Research Inc. said.

In fact, analyst Demisch said, Joint Strike Fighter will probably cost money for several years before it stands to pay off. "The win is wonderful sometime around 2010," he said. "But how you keep the doors open until then is the $64,000 question."

More cuts are undoubtedly on the way, Demisch added, though management is "sensitive to the damage you can do to your long-term profits by trying to go for very short-term advances. So my guess is they're going to try to minimize the pain."

The company said the cuts would create no material charge to this year's earnings, and would add up to annual savings of $300 million by 1999.

Combined with other streamlining efforts -- including the recent sale of two armament units to General Dynamics and the shareholder spinoff of Martin Marietta Materials -- the company expects total annual savings of $2.6 billion by 1999.

"Based on our experiences from the Lockheed Martin merger and previous merger and acquisition actions, we are confident this consolidation will meet our goals to increase competitiveness, reduce costs to our customers, expand opportunities for our employees and enhance shareholder value," Chief Executive Officer Norman R. Augustine said in a news release.

The cuts amount to less than 1 percent of Lockheed Martin's 190,000-member work force. With annual sales of about $30 billion, the company will continue to be the world's biggest defense contractor.

Lockheed Martin's headquarters in Bethesda will gain about a dozen positions as the headquarters of the former Loral transfers there from New York.

But, with the consolidations of various internal departments, employment in the Maryland-Washington-Virginia area will remain fairly steady, spokesman Manor said.

No layoffs are expected in Rockville, where the company's two air traffic control offices will merge into one.

Wall Street was already congratulating Lockheed Martin yesterday over the Joint Strike Fighter announcement, and the company's stock closed up $1.875 at $95.625.

Pub Date: 11/19/96

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