Northrop to cut 400 local jobs

Linthicum unit will offer severance to 1,000 but may need layoffs

October 14, 2005|By PAUL ADAMS | PAUL ADAMS,SUN REPORTER

Northrop Grumman Corp., which employs 9,000 in Maryland, said yesterday that it is eliminating about 400 manufacturing jobs at its Linthicum campus, where the defense contractor develops and builds radar systems and a host of electronic sensors and networks that act as the eyes and ears for the U.S. military.

Northrop said it would offer about 1,000 employees a voluntary severance package including up to 50 weeks pay, depending on years of service. If fewer than 400 volunteers take the buyout, the company will institute involuntary layoffs. The cuts will be carried out by Dec. 30.

The job cuts were blamed on a decline in orders from domestic and foreign military customers. The company declined to offer specifics, but defense industry analysts said an expected decline in radar orders for F-16 jet fighters and lackluster international sales for AWACS surveillance systems could be partly to blame.

The announcement comes as the Pentagon is preparing for steep cuts in the next budget cycle. But the news did nothing to dim analyst predictions of substantial long-term growth in Northrop's Electronic Systems division headquartered in Linthicum.

The division is charged with developing the radar and other electronics for the military's next generation of jet fighters, missile defense systems and ships.

Company officials and defense industry analysts said job prospects at the suburban Baltimore plant, which employs more than 7,000, would stabilize once full-scale production begins for new weapons systems. Among these are the radar components for the Joint Strike Fighter, an advanced warplane that could be the most lucrative weapon system in military history.

"As production of the [Joint Strike Fighter] in particular builds up, that will enable us to strengthen the backlog and stabilize the work force requirements going forward," said Jack Martin, a Northrop Grumman spokesman.

Northrop shares gained 41 cents to $53.01 per share in trading yesterday.

The company said it still plans to hire as many as 300 systems and software engineers by year's end to support development of products in the pipeline.

The job cuts will target employees in manufacturing, procurement, quality assurance and a number of support functions.

The company declined to give the average salaries of the targeted workers, and three unions representing workers at the plant did not respond to phone messages yesterday.

"It's shocking," said Vermell Williams, a Baltimore resident who has worked at the plant for 39 years.

Williams said her co-workers were upset by the news. "I'm coming to work tomorrow. I'm coming every day they let me in," she said.

Zenette Mullen, a 37-year veteran at the plant, said she wasn't worried because she has seniority.

"I worry about the new people," she said, leaving the plant for a union meeting yesterday afternoon.

Some analysts said the job reductions in Linthicum are not a surprise, given the declining orders for F-16 fighters over- seas.

Northrop makes radar systems for the planes, which have been a workhorse of the U.S. Air Force and several foreign customers. Richard L. Aboulafia, an aerospace analyst with the Teal Group in Fairfax, Va., said F-16 orders will decline from the mid-60s this year to about two a month by 2008.

"The F-16 is cycling down again and the JSF [Joint Strike Fighter] is still a few years off," he said. "We're talking, like, 2012 before you see F-16-like numbers with the JSF. Until then, it's just research and initial boutique production."

Similarly, sales of an advanced generation of AWACS surveillance planes have failed to take off, he said.

Northrop makes the radar system for the planes. Australia and Turkey were the initial customers for the new system, but sales to other allies have yet to materialize.

But the future of the Linthicum plant will depend mostly on the prospects for the Joint Strike Fighter.

The size of the program has shrunk since it was first conceived, and further cuts could come as the Pentagon prepares to reduce costs to help the Bush administration pay for hurricane relief and the war in Iraq.

Even taking that into consideration, industry analysts see Northrop's Linthicum division prospering at a time when the rest of the company is bracing for difficult times.

Northrop said this month that hurricane damage to its Gulf Coast shipyards will cost $1 billion and shave 9 percent from its 2005 earnings. And its shipbuilding and other traditional hardware programs face an uncertain future as the military shifts priorities toward more sophisticated electronic warfare and communications systems, which are the Linthicum division's specialty.

"In general, the Linthicum facility is better positioned for the next five years of defense demand than much of the rest of the sector is," said Loren Thompson, a defense analyst at the Lexington Institute, a think tank in Arlington, Va.

paul.adams@baltsun.com

Sun reporter Chris Yakaitis contributed to this article.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.