washingtonpost.com > Business > Local Business

General Dynamics, Northrop Grumman Cut Jobs

Associated Press
Friday, March 6, 2009

General Dynamics said plummeting sales of business and personal jets have forced it to cut production of the luxury planes, leading to layoffs of 1,200 workers and a reduction in company profit guidance for the year.

The Falls Church company blamed a shrinking backlog at its Gulfstream Aerospace unit as a drop in demand accelerated in February as the broader economic picture grew bleaker.

General Dynamics also cut its 2009 earnings guidance to $6 to $6.10 per share, down from $6.70 to $6.75 share, because of the lowered expectations at Gulfstream.

The job cuts, which include about 550 contractors, will be concentrated at Gulfstream's Savannah, Ga., plant, but will also occur at facilities in Appleton, Wis.; Brunswick, Ga.; Long Beach, Calif.; and Dallas, General Dynamics spokesman Rob Doolittle said. The company has about 92,300 employees.

Business jets are mostly used to ferry corporate executives or wealthy individuals in plush cabins with cushy seats and wood-paneled interiors. Many models are pricey -- General Dynamics' new G650 will sell for around $60 million. But demand has hit a wall in recent months, and the planes face a public relations challenge after becoming equated with corporate excess.

As recently as January, General Dynamics said it was cautiously optimistic about Gulfstream sales, saying that while sales would be lower this year than in 2008, it had orders for more of the bigger and pricier models.

However, General Dynamics said yesterday that the largest erosion of its backlog came in large-cabin aircraft production and delivery. It now expects to work on 73 of the planes this year, down from earlier forecasts of 94. Gulfstream said it will reduce production of its midsize aircraft from a projected rate of 30 to 24 aircraft this year.

Company chief executive Nicholas Chabraja said General Dynamics remains confident in the Gulfstream business.

"We continue to believe that Gulfstream's backlog provides a solid foundation for the business in this tough market environment," he said in a statement.

Also yesterday, Northrop Grumman said it will lay off up to 750 workers, most of them in Southern California. The Los Angeles-based aerospace company said the cutbacks were needed as it consolidates administrative staffs from its merger of its aircraft-making Integrated Systems unit with the satellite-making Space Technology unit.

Northrop spokesman Dan McClain said the workforce will probably expand soon, noting that the combined unit has more than 850 vacancies for skilled, technical jobs in engineering and manufacturing.

The company is the nation's second-largest military contractor with more than 120,000 employees worldwide.

© 2009 The Washington Post Company