Raytheon to cut back in Towson

Plant's 600 jobs will be pared to 300 by shift to Florida

Identification Systems

Manufacturing going

designing, marketing are remaining

Consolidation

May 27, 1999|By Greg Schneider | Greg Schneider,SUN STAFF

About 300 jobs will leave Towson this year when Raytheon Co. phases out manufacturing operations at its Identification Systems plant on East Joppa Road, the company said yesterday.

The move will leave about 300 employees at the military electronics plant, which just a few years ago employed 1,200 people. Raytheon bought the plant from AlliedSignal in September for $67.5 million.

The manufacturing work is being transferred to a new factory in Largo, Fla., as part of a year-long effort to consolidate and streamline operations.

Identification Systems will continue to design, market and manage products such as friend-or-foe identification systems for military aircraft, secure communications devices and air traffic control radar designed to help civilian airports handle more traffic.

"The best growth strategy for Identification Systems is to focus the Towson site on front-end business development and engineering," said Frank S. Marchilena, a Raytheon senior vice president and general manager of Command, Control, Communication and Information Systems.

The 300 manufacturing workers will lose their jobs gradually between summer and the end of the year, spokeswoman Maria Stamas said. They can apply for work at the new Consolidated Manufacturing Center in Florida, which will employ about 400 people as it begins producing product lines from throughout Raytheon.

The company also will recruit Towson workers for jobs elsewhere in Raytheon, and will provide help in finding jobs outside the company as well as, in some cases, severance packages, Stamas said.

"We are committed to treating our employees with dignity and respect during this transition process," Marchilena said.

Workers learned about the decision yesterday morning at an all-hands meeting broadcast to offices throughout the facility. Many had known that such a change was possible because of Raytheon's well-publicized efforts to cut costs in the wake of several major acquisitions. Last fall, the corporation eliminated 16,000 jobs.

"They paid a fairly steep price for the last acquisition, which was the defense segment of Hughes, so in order to get a payback they had to dramatically restructure the business," said Todd B. Ernst, a defense industry analyst for Prudential Securities in New York.

Another observer said the move makes sense as part of an industry-wide squeeze on defense manufacturing.

"Florida is in general a lower-cost place to do business than Maryland, and it is absolutely a trend in the industry of companies finding any way they can to get manufacturing costs lower," said Stuart McCutchan, who publishes the Defense Mergers & Acquisitions newsletter.

The loss of manufacturing is not necessarily a bad omen for the Towson plant, Ernst said. Identification Systems is still expected to log about $120 million worth of business every year.

"They fit in well with the businesses that the company wants to be in," Ernst said. "Now, the location is another story. I don't know whether they would [further] consolidate that existing facility."

Stamas said the company has no plans to take the remaining jobs away from Towson.

Pub Date: 5/27/99

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