Northrop Grumman Plans More Layoffs : Defense: Chairman says post-merger ‘streamlining’ won’t be as severe as previous cuts.
Northrop Grumman Corp., formed Wednesday by the completion of Northrop’s $2.2-billion purchase of Grumman, plans more job cuts this year as it eliminates duplicate functions at the aerospace concern, Chairman Kent Kresa said.
“As we bring our two companies together, further employment streamlining will result,” Kresa said at the company’s annual meeting in Los Angeles. “However painful, these moves are essential for us to sustain our competitive edge in this environment.”
The number of jobs to be lost is not yet known, he told reporters afterward, but it will be “small” compared to the 4,500 jobs that Northrop and Grumman previously said they would scrap this year because of reduced Pentagon spending.
Northrop Grumman currently employs 45,000 people.
Kresa also outlined the financial and administrative contours of the new company for the first time since Northrop Corp. won the bidding for Bethpage, N.Y.-based Grumman Corp. against rival suitor Martin Marietta Corp. last month.
Based on its current defense programs, Northrop Grumman expects “to post stable sales in the $6-billion-plus range for the next several years,” even after the company finishes building the 20 B-2 stealth bombers that are on order by the Air Force later this decade, Kresa said.
However, the winding down of the B-2 program will cause massive layoffs at Northrop Grumman. The company has already said it will close one of its B-2 plants, in Pico Rivera, in 1997 as the program nears an end. The other plant is in Palmdale.
Grumman, a specialist in defense surveillance and electronics gear, should start adding to company profit beginning in 1995, when Northrop Grumman also expects to start saving $250 million a year from the streamlining, Kresa said.
He also said the company, while retaining Northrop’s Los Angeles headquarters, will operate five divisions: the B-2, other military aircraft, commercial aircraft, electronics and systems integration, and data systems and services.
The B-2 and military aircraft units will remain based in California, while electronics and data systems will be based in Bethpage, Kresa said. The company has not yet decided whether to keep its commercial aircraft group based in California, but the production of fuselages for Boeing’s 747 jumbo jet will remain in Hawthorne, Kresa said.