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Lockheed Martin Will Pare 19,000 Workers

By John Mintz
Washington Post Staff Writer
Tuesday, June 27, 1995; Page D01

Lockheed Martin Corp., the offspring of a corporate merger three months ago, announced yesterday that over the next five years it will lay off 19,000 employees and close 12 factories and laboratories, many of them in the nation's industrial Northeast.

Hundreds of governors, mayors and other elected officials, as well as chambers of commerce and union delegations, had pleaded with the company not to close facilities in their communities. But executives said tight military and space budgets forced their hand.

"We believe these actions improve the long-term prospects of the company by making us more competitive," Lockheed Martin Chairman Daniel Tellep said yesterday at the company's Bethesda headquarters. "These actions, as difficult as they are to take, are designed to preserve jobs."

"We have great empathy and concern for the employees affected by this plan," Tellep added. "But we have an obligation to the employees who will remain with us."

Altogether, 7.7 million square feet of factories, labs and offices will be shuttered. The company's actions, taken as a whole, will save it $1.8 billion a year.

The biggest losers are Utica, N.Y., which will lose 930 defense electronics jobs; the Philadelphia suburb of Valley Forge, which is losing an 1,800-employee plant that makes satellites; and East Windsor, N.J., near Trenton, which is home to a 3,200-employee satellite facility that is closing.

The biggest winner is the Silicon Valley community of Sunnyvale, Calif., which has a much larger plant in the satellite and missile business that was spared. Company officials said "a substantial number" of the Valley Forge and East Windsor employees will move there. About 1,100 more employees are likely to be hired at another satellite component plant planned for somewhere in eastern Pennsylvania.

The effect of the closings on the Washington region was minimal.

Baltimore County officials were relieved to learn that no jobs will be lost at Lockheed Martin's factory on the Middle River in Baltimore, which came under heavy scrutiny because of problems in its business making thrust reversers, the jet engine parts that stop planes on landing.

Company President Norman Augustine said the company periodically will reexamine the Middle River plant "to see if we remain competitive."

Baltimore County lost another facility, though. A research and development office in the Baltimore suburb of Catonsville, employing 240 people, and another one with 175 workers in Syracuse, will be closed, and some of the employees will get jobs at remaining research facilities in Palo Alto, Calif.; Nashua, N.H.; and Camden, N.J.

Most of the savings from the defense company's cuts will flow to the government, because most government defense contracts are structured to pay for firms' expenses and overhead, plus a profit. The idea behind the layoffs is that Lockheed Martin will be able to bid lower on federal contracts and and win more work.

Lockheed Martin officials said an internal review concluded that in recent years the two companies had laid off 10,000 employees because inefficiencies and inflated cost structures had caused them to lose some key contract awards.

The company's board approved the actions last Friday, and the firm planned to make its announcement this coming Friday. But speculation was so intense, and so many rumors were circulating, that executives decided to move up the announcement.

"We wanted to address the problem quickly, to minimize the period of uncertainty for our employees and customers," Tellep said.

The company was operating on a fast track to make the announcement only three months after the merger that made Lockheed Martin the world's biggest defense company. Most merged firms take six or eight months to make such key decisions.

The company said 12,000 of the layoffs are a result of finding overlap in the merger of Martin Marietta Corp. and Lockheed Corp., such as in computer functions, auditing, payroll, research and human relations. Five thousand job cuts will come this year and 3,000 next year.

Moreover, the firm announced it is laying off 7,000 other employees because of a downturn in its defense and space business. It said it may have to lay off still more employees if that business doesn't pick up.

Other facilities that will close include an aircraft machining plant in Abilene, Tex., with 450 jobs; an Austin factory that makes parts for satellite ground control mechanisms, with 780 jobs; and an aircraft maintenance site in Tucson, with 350 jobs.

© Copyright 1995 The Washington Post Company

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