By Dana Hedgpeth
Washington Post Staff Writer
Thursday, January 7, 2010; A14
Defense contractor Lockheed Martin of Bethesda said that it plans to cut 1,200 employees by the spring as it consolidates two of its business units and that it foresees a slowdown in its upcoming work from the Pentagon.
The cuts, executives said, are meant to help lower costs and will affect a range of workers, from administrative assistants to engineers and vice presidents. It has not been determined from which offices employees will be cut. They are expected to be notified by early April.
The layoffs follow Lockheed's announcement in November that it would combine two units in its electronic systems business -- the former Maritime Systems & Sensors and the Systems Integration-Owego group. The newly combined unit, Mission Systems & Sensors, will provide ships, helicopters, radar and other systems to the maritime industry and other customers.
"The layoffs are a result of redundancies created by the integration of the two businesses as well as a general staffing imbalance based on projected 2010 workload in our business," said Anne Marie Squeo, a Lockheed spokeswoman. "We decided we needed to take out some jobs to be more cost-effective.
"When you look at the work flow coming out of the Pentagon, there's a different pace," she said.
Lockheed laid off about 730 people at its Owego, N.Y., operation last year after the government terminated a program to replace the fleet of presidential helicopters, as well as other programs.
Like other major contractors, Lockheed has benefited over the past several years from rising Pentagon budgets, boosted in large part by the wars in Iraq and Afghanistan. But growing pressure on defense budgets, combined with a push from government officials for tighter controls on costs and performance of expensive, complex defense systems, have made contractors more nervous.
Lockheed has "had a major hit on the cut of the F-22 [fighter jet], and the F-35 [fighter jet] ramp-up is going to be slower than expected," said Richard Aboulafia, a vice president at the Teal Group who specializes in aerospace analysis. "That means fewer of those jobs can be transitioned over."
He and other analysts predict that there could be more job cuts at defense contractors as the Pentagon prepares its longer-term budget outlook in the coming months. Last year, the aerospace company Boeing said it would have major job cuts as some of its defense-related programs took hits from the Pentagon's budget.
"There is a natural lag time between the federal budget process and real-world effects of those funding decisions," said Mackenzie Eaglen, a defense industry analyst at the Heritage Foundation. "Now these decisions are coming home to roost in 2010 and 2011. It is inevitable that all the defense contractors will see some level of production job layoffs -- of engineers, mechanics, technicians and welders -- the people who literally work the line."