Lockheed Martin Space Systems Co., a major business area of Lockheed Martin Corp. (LMT: Quote), said Tuesday it will cut around 1,200 jobs by the year-end in order to to address affordability and improve its competitiveness.
Lockheed Martin Space Systems designs, develops, tests, manufactures, and operates a full spectrum of advanced-technology systems for national security, military, civil government, and commercial customers. It currently employs about 16,000 employees in 12 states.
For the recent first quarter, sales from the Space Systems segment declined by around 4 percent to $1.84 billion, due to lower volume of about $100 million on the Orion program and the External Tank program of about $35 million as the space shuttle program winds down. Segment operating profit advanced around 5 percent.
Commenting on the job cuts, Joanne Maguire, executive vice president, Lockheed Martin Space Systems, said, "This is a difficult but necessary action to improve efficiencies and make our business more competitive going forward."
Space Systems said it would implement a broad-based workforce reduction of roughly 1,200 employees by year-end. It is anticipated that middle management will be reduced by 25 percent, with significantly smaller percentage impacts in other levels and disciplines.
Operations across the country will be affected, with the largest impact expected at Sunnyvale, California, the Delaware Valley region of Pennsylvania, and Denver, Colorado, where several of the company's major programs are transitioning out of development.
Space Systems said it will offer eligible salaried employees an opportunity for a voluntary layoff to minimize the number of involuntary layoffs that will occur. The company will also provide career transition support to those affected by this workforce reduction.
Last month, Lockheed Martin chairman and chief executive officer, Bob Stevens, in an update on key programs, shared details of the company's affordability initiatives and said it has consolidated facilities, divested two businesses, reduced the senior employee ranks by 26 percent, reduced expenses and frozen salaries of its most senior employees.
Stevens outlined over $500 million in cost reductions from the initiatives, including $350 million attributed to the recent voluntary executive separation program, and several hundred million dollars in additional overhead cost savings in 2011 to be built into forward pricing proposals.
For the most recent first quarter, Lockheed Martin reported a first-quarter profit that dropped marginally from last year, as margins came under pressure even as revenues grew year-over-year. The company lifted its full-year earnings forecast linked to a favorable resolution of tax matters, and maintained its revenue projection.
Lockheed Martin is currently trading at $79.97, up $1.11 or 1.41%, on a volume of 1.54 million shares.
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by RTT Staff Writer
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