The Westinghouse Electric Corp.'s defense division announced yesterday that it will eliminate the jobs of about 1,000 of its 15,000 workers across the country, with most of the cuts coming at its big complex in Linthicum.
The round of job losses will be the fifth since 1991 at Westinghouse's Electronic Systems. It will drop the company's Maryland work force to about 8,000 by early next year, down from a high of 17,000 in 1988.
"We didn't need this," said one Westinghouse engineer who asked that his name not be used. "Morale had already hit rock bottom a long time ago. Now everybody is nervous. Everybody is wondering if their name is on the list. Am I the next one to go out the door?"
In his letter to employees announcing the new job cuts, Francis J. Harvey, the president and CEO of Electronic Systems, said the action was in no way connected to the corporation's recent announcement to acquire CBS for $5.4 billion. Officials at Westinghouse's headquarters in Pittsburgh stressed the same point.
In his letter to employees, Mr. Harvey, who took over as president and CEO of Electronic Systems in March, said they are necessary for the division to remain competitive in seeking new contracts.
The "majority" of the jobs eliminated, he said, will be at the Westinghouse complex near Baltimore-Washington International Airport, where 7,000 are employed.
Westinghouse has about 8,600 workers in Maryland, making it the state's largest manufacturer. The Electronic Systems Group also has plants in Annapolis, Sykesville and Hunt Valley.
The new reduction will be through layoffs and attrition. Jack Martin, a company spokesman, said it is too soon to know how many workers will be laid off.
Notices next month
The company is scheduled to begin issuing layoff notices the middle of next month and the process will continue into 1996, Mr. Martin said.
Mr. Martin said there would not be any early-retirement buyout offer, like the one Westinghouse made in May 1994 when it
wanted to eliminate 6,000 jobs from its worldwide operations.
Mr. Martin said the new reduction will apply to managers and professionals as well as hourly workers.
Westinghouse looms so large in the Maryland economy that cuts even at just one division reverberate throughout Maryland's economy.
If 70 percent of the 1,000 job cuts announced yesterday are in Maryland that would raise the state's unemployment rate to 5.5 percent from 5.0 percent, predict Michael A. Conte, director of the University of Baltimore's regional economic studies program.
"One of the most depressing facts is that even after these cuts Westinghouse remains the largest manufacturer in Maryland," Mr. Conte said. "That's not good."
Since 1988, Mr. Conte said, Maryland employment in the electronic and equipment industry and the measurement equipment business has fallen to 16,000 from 28,000. Westinghouse accounts for about 60 percent of all Maryland jobs lost in those industries, he said.
The worst part is that many displaced Westinghouse workers may leave the state to find new jobs, Mr. Conte added. Economists believe that a marked slowdown in migration to the state since 1989 is a leading reason why Maryland has recovered more slowly than the rest of the nation from the 1990-1991 recession.
The full economic impact of the cuts will be felt well beyond the boundaries of Westinghouse's plants in the state.
fTC Job losses elsewhere
Richard A. Bitzinger, an analysts with the Defense Budget Project, a Washington-based nonprofit research organization, said each job eliminated by Westinghouse will likely lead to the loss of another job among the supplier and subcontracting company doing business with Westinghouse.
In its effort to reduce operating costs, Westinghouse has already trimmed its number of hardware suppliers to 830 from the 2,700 it had in 1990.
Mr. Harvey announced the reduction after reviewing the division's 1996-98 business plan.
"While the plan highlights many bright spots and numerous opportunities for growth, the overall performance levels forecasted by the plan are not satisfactory, and significant changes are still required if we are to achieve the vision that has been established for Electronic Systems," Mr. Harvey said in his letter to employees.
In another part of the letter he said: "While we certainly are a technological leader, it is equally certain that we are not a low-cost producer."
He noted that the defense industry has gone through a dramatic shakeout in recent years and "the survivors have fortified their leadership positions through significant cost and expense reductions."
Mr. Harvey used Raytheon Corp. as an example. He noted that the Lexington, Mass.-based competitor of Westinghouse announced plans earlier this year to reduce costs by $600 million a year by 1999.
Mr. Harvey did not disclose any details of Electronic Systems' business plan, and company officials did not say how much savings the company is seeking to achieve by cutting the work force.
Roy Morrow, a spokesman at Westinghouse corporate headquarters, said the new round of layoffs here is not part of any corporate strategy.
"It is an action driven by the business unit itself, Electronic Systems," he said. "It is action taken after their examination of their competitive position and cost structure."
Mr. Harvey was not available to comment on the layoffs or the division's business plan. The company could not say yesterday if any plants are slated to close.
The announcement raises new questions about the future of Westinghouse's defense operation, which has seen sales slip to $2.5 billion last year from $3.2 billion in 1990. Over the same span, its operating profits have fallen to $165 million from $329 million.
Despite its troubles, Nicholas P. Heymann, an analyst with Nat-West Securities Inc. in New York, said he does not see Westinghouse selling off its defense operation anytime soon, unless its stock remains in its long slump.
"If they can get the share price up to $20 range the people down there [Electronic Systems] have nothing to worry about," Mr. Heymann said. "If they don't it's a different story."
Mr. Heymann said Westinghouse is looking to increase the value of its stock, which traded in the high 30s in 1990 and as low as 11 last year.
Selling non-media businesses
One option, he said, would be sell off all of its non-media businesses. This, he explained, would create a debt-free company in an industry with greater prospects for improved profits.
In 1994, Westinghouse's five television stations, 16 radio stations and other broadcasting businesses were three times more profitable than any of the company's three biggest businesses ranked by sales. Broadcasting was about 10 percent of the company's $8.8 billion in revenue but nearly a third of its operating profit.
Westinghouse shares closed yesterday at $15, up 62.5 cents.
Electronic Systems also has plants in Cleveland; Sunnyvale, Calif; Orlando, Fla; Melville, N.Y.; Dallas, and College Station, Texas.
James T. Brady, the Maryland secretary for business and economic development, was traveling yesterday and could not be reached for comment.
Westinghous at a glance
Employees in Maryland: 8,600
What they produce: Radar, communications, satellite and telephone systems. About 57 percent of sales are defense related.
Cuts announced yesterday: 1,000, the bulk of which will come from the Linthicum plant. They will comprise both layoffs and reductions through attrition.
When will the cuts take place: Beginning in mid-October and continuing into 1996.
Who will be affected: All types of workers, from managers to hourly employees.