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Lockheed Martin to lay off 12,000 and shut 38 plants, offices by 1999


A story in yesterday's Sun misidentified the director of Lockheed Martin Corp.'s Catonsville research laboratory. He is David Goldheim.

The Sun regrets the error.

BETHESDA -- Lockheed Martin Corp. announced yesterday that it would eliminate 12,000 more jobs and close 38 plants and other facilities around the world -- including a 245-worker research laboratory in Catonsville -- by 1999.

The move, anxiously awaited by employees and government officials throughout the country, was aimed at saving $1.8 billion a year by the end of the decade and keeping the company trim amid Pentagon cutbacks, the company said.

"Unless we take these actions we risk becoming noncompetitive," Chairman Daniel M. Tellep said yesterday in making the announcement.

While Maryland's 2,800 Lockheed Martin employees were not spared pain, they got off lightly compared with workers in other states where the defense contractor has big operations. Significantly, the company's Middle River plant was spared closure, although a company spokesman said efforts would continue to "rightsize" the plant's 1,100-worker payroll.

Further, Lockheed Martin is expected to add about 100 workers at its newly consolidated headquarters in Bethesda, while the former headquarters of Lockheed Corp. in Calabasas, Calif., will close.

"We had a few job losses, but it is not so bad," commented Michael Conte, director of the Regional Economic Studies program at the University of Baltimore.

Hardest hit by yesterday's announcement are East Windsor, N.J., and Valley Forge, Pa., where Lockheed Martin will close spacecraft plants employing a total of 5,000 workers. Texas will lose two plants and 1,200 jobs. In all, 12 plants and labs will close, as well as 26 field offices whose work overlaps.

Mr. Tellep said the nation's largest defense contractor needs to make the cuts even though it reported strong profits in the three months that ended March 31, the first quarter of combined operations after the $10 billion merger of Lockheed Corp. and Martin Marietta Corp. After a $165 million merger-related charge, Lockheed Martin said it earned $137 million on sales of $5.6 billion in the first three months of 1995.

Lockheed Martin must keep shrinking because its main source of business -- military spending -- is shrinking, Mr. Tellep said.

"There have been large, deep cuts in defense spending. And about half our work is for the Defense Department," he said.

He suggested that painful medicine now will produce a healthier company that is less likely to lay off workers in the future.

"Employees should want their company to make a profit," he said.

And he stressed that things could have been much worse.

"Nine out of 10 employees will retain their jobs," Mr. Tellep noted. "For them this is a positive action."

His words were little solace to workers who got bad news yesterday.

David Goldman, director of the company's Catonsville research operations, said he and his staff were surprised and disappointed by the announcement.

Mr. Goldman said some of the engineers and scientists in Catonsville may be offered jobs at some of the surviving laboratories, but he didn't know any details.

He said he didn't know why the company decided to close the local research facility, which has been in the Baltimore area for more than 40 years.

"We are disappointed, of course. We are of the opinion that the technological assets here are valuable," he said, noting that the local lab developed "Weldalite," a light and strong aluminum alloy used in aerospace and in manufacturing computer chips.

Company spokesman Charles P. Manor said that besides the Catonsville closure, Lockheed Martin has no plans for major cuts or closures for any other Maryland operation. He declined to say how many more jobs would be eliminated at Middle River.

Yesterday's announcement is the latest retreat in an eight-year contraction of the defense industry.

At their peak in 1987, the companies that now make up Lockheed Martin employed about 272,000 employees. Together with previously announced cuts of 7,000 jobs this year, the moves announced yesterday will reduce the combined company's payroll to fewer than 155,000.

Maryland, the fifth-most defense-dependent state in the nation, has been hit hard by Pentagon budget reductions. The state's three biggest military contractors -- Lockheed Martin, AAI Corp. and Westinghouse Electric Corp. -- have eliminated more than 12,000 jobs in recent years.

Only last week, the U.S. Defense Base Closure and Realignment Commission voted to close Fort Ritchie, near Hagerstown, and eliminate facilities and hundreds of military jobs in Baltimore, Middle River, Annapolis, Montgomery County and Fort Meade.

Mr. Tellep said he couldn't say whether yesterday's list represents the last of the cuts at Lockheed Martin. Asked if there would be any more layoffs, he replied: "We're not saying anything. . . . We hope not."

About 5,000 jobs will be eliminated this year and 3,000 more in 1996. Another 4,000 job cuts will be spread over the remaining three years of the consolidation, due to be completed in 1999.

The consolidation will cost Lockheed Martin $1.7 billion over the next two years. The company will take a pretax charge of $525 million in its second fiscal quarter to cover the layoff and closure costs. The rest of the costs will be recouped from the federal government, Mr. Tellep said.

Lockheed Martin's shares fell $2, to $61.625, on the New York Stock Exchange yesterday. Analysts said some investors were expecting bigger cuts.

Still, analysts were generally positive about yesterday's announcement.

"It is great for Lockheed. This was the whole reason" for the merger, said John A. Modzelewski, who follows the defense industry for PaineWebber in New York.

"Profitability has never been higher for themselves and the industry, and that is why they did it, to push profits higher and higher. That's the object," Mr. Modzelewski said.

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