General Dynamics’ Chief Says Restructuring to Pay Off for Shareholders

General Dynamics Chairman William Anders suggested that shareholders could reap the benefits of the company’s ongoing restructuring as early as March, but aerospace industry analysts believe it could take substantially longer for the company to determine the fate of employees at its non-core defense businesses.

That determination in a press release issued Friday is of interest to 16,000 San Diego-based General Dynamics employees because, in a speech late last year, Anders said the company would focus on its three core businesses--army tanks, submarines and fighter aircraft. Remaining businesses will be sold off to competitors, strengthened through acquisitions or simply disbanded, Anders said.

The speech shook employees at General Dynamics’ three locally based divisions--Convair, Electronics and Space Systems--because those operations all are outside of the company’s core businesses. General Dynamics is the county’s largest private employer with 16,000 workers.

Anders said that, as early as March, General Dynamics’ shareholders would begin to receive excess cash generated by the company’s ongoing sale of corporate assets. The company had $800 million in cash at the end of 1991, Anders said.

“The investment community has been eagerly awaiting his plan to distribute some of General Dynamics’ excess capital to the shareholders,” Wolfgang Demisch, a New York-based aerospace industry analyst with UBS Securities, said Monday. Analysts expect General Dynamics to transfer cash to shareholders through dividends or stock buyback programs.

But Demisch said the future of businesses that are outside of General Dynamics’ tank, fighter and submarine operations remains “an open issue. . . . (Anders) still hasn’t laid all of that out. And he isn’t really compelled to rush that. He might want to examine it for (at least) the rest of the year.”

While Anders’ prepared statement didn’t say when the corporate restructuring would be completed, it underscored the idea that the company won’t necessarily remain in businesses where it lacks “sufficient critical mass in design and manufacturing.”

That comment was in line with Anders’ previous statement that General Dynamics and other defense contractors “can no longer carry businesses that aren’t No. 1 or 2 in their fields of expertise.”