Lockheed cuts 4,000 jobs

I’ve been hearing for months that, with shrinking budgets, there is overcapacity in the government services portion of the market, and Lockheed Martin’s announcement today about closing facilities and cutting 4,000 employees pretty much proves it.

The layoffs and closings affect four of the company’s sectors, including Information Systems and Global Solutions, which will lose 600 people with the closing of its Goodyear, Ariz., facility.

Work being done in Goodyear is primarily command, control, communications, computers, intelligence, surveillance and reconnaissance work and development of the synthetic-aperture radar technology.

By early 2015, the programs in Goodyear will be moved to Denver and Valley Forge, Pa.

Lockheed’s Space Systems will suffer the biggest hit with 1,250 employees losing their jobs. The company’s Newtown, Pa., space will close by early 2015, with commercial and military satellite work moving to Denver. About 350 jobs will be added in Denver either through relocations or new hires.

In Sunnyvale, Calif., Space Systems will lose 200 workers as operations are consolidated and four buildings are closed.

Mission Systems and Training will lose 500 workers with the closing of most of the Akron, Ohio, facility. Lockheed is keeping the Akron Air Dock operations open.

Finally, the Missiles and Fire Control sector will close its Horizon City, Texas, operations and move the Army Tactical Missile System work to a facility in Camden, Ark. Eleven jobs will be lost.

The company expects to eliminate another 2,000 positions through other ongoing efficiency moves.

“I regret these actions will adversely impact some of our colleagues who have made tremendous contributions to our corporation, their communities and our country,” Lockheed CEO Marillyn Hewson said in a memo to employees. Since 2008, Lockheed has reduced its headcount from 146,000 to 116,000.

Lockheed, of course, isn’t alone in making these tough decisions, but at its size, even a 1 percent reduction in force impacts thousands of people.

The moves are emblematic of the drastic changes the market is going through, and will continue to go through for the next 18 months to two years, especially with the uncertainty around budgets.

“It’s another indication of how companies are streamlining and reducing their cost structures to adjust to the fiscal realities,” said Stan Soloway, president of the Professional Services Council. “The question is and will remain just how deep they can cut without losing critical capability.”

That’s the scary part because while budgets are cut and companies cut positions, the pace of the mission doesn’t go down. If anything, the tempo of missions continues to increase. Just look at our ongoing response to the typhoon in the Philippines.

The frustrating thing is that until Congress and the White House get their act together and establish a stable, predictable budget process, we’ll continue to see more contraction in the market place.

Unfortunately, Lockheed’s actions today aren’t the end of the process; there is going to be more pain across the market.