General Dynamics Says It May Sell Units
General Dynamics Chairman William Anders, who is dramatically reshaping the nation’s No. 2 defense contractor, has ignited speculation that the St. Louis-based company might sell or restructure two divisions that employ thousands of San Diegans.
Anders, in a speech Wednesday night to an aerospace industry group in Florida, said General Dynamics will increasingly concentrate on its core defense businesses of building tanks, submarines and fighter aircraft.
General Dynamics officials said Thursday that the company has only begun the complex task of determining which businesses to keep or sell.
The company’s missile and electronics operation has about 16,000 employees in Southern California, including 11,000 in San Diego. General Dynamics also has about 4,600 employees in its San Diego-based commercial rocket division.
The firm already has consolidated two missile divisions in Pomona and Rancho Cucamonga, put facilities up for sale and undertaken several large-scale layoffs, paring employment to 5,000.
In a memorandum circulated to employees on Thursday, Michael Keel, vice president of General Dynamics’ Missile and Electronics Group, said the only way for those San Diego-based operations to survive as “a viable business in a declining market . . . (is to) merge with a competitor, buy (a competitor) and be stronger, or sell our assets.”
Union officials were uncertain what to make of the company’s statements.
“We don’t know if he’s talking about (an entire) division, a product line or some equipment,” said Vickie Powers, a spokeswoman for the International Assn. of Machinists.
On Wednesday, Anders called upon defense contractors to remain in only those businesses where companies have the “critical mass” to maintain a “strong competitive edge.” He also said defense contractors can no longer carry businesses that aren’t “No. 1 or No. 2 in their areas of expertise.”
Market leaders could strengthen their position by absorbing weaker competitors, Anders said, while corporations that sell off their weaker businesses would receive cash that could be poured into their remaining, stronger businesses.
