Lockheed Closing Two Local Plants; 600 Will Lose Jobs in Consolidation
Lockheed Martin Corp. delivered another blow to Southern California’s battle-scarred defense industry by announcing Monday that it will close two plants, laying off more than 600 people and transferring nearly 300 jobs out of state.
The Rancho Santa Margarita and Glendale plants are among eight sites nationwide that Lockheed will shutter as a final step in consolidating operations after its April purchase of Loral Corp. Altogether, 1,600 workers will lose their jobs.
Lockheed said those being laid off in the consolidation may be able to transfer to newly created employment elsewhere in the company.
The closings and the layoffs follow on the heels of $3-billion deals Lockheed won in the last two weeks. The awards include Saturday’s $1.1-billion contract that gives it the right to compete for the Pentagon’s biggest job, a $219-billion project to build the next generation of fighter jets.
The awards were unrelated to the consolidation. The company had said after its Loral purchase that it would review its business lines and consolidate operations. Even so, the news stunned some employees.
“I’m shocked,” said one engineer at Lockheed’s Rancho Santa Margarita plant. “Everybody knew this was going to happen, but we didn’t think it would happen so soon.”
The Aeronutronics division, which moved to Rancho Santa Margarita from Newport Beach only three years ago, is the hardest hit.
Lockheed will lay off 525 of Aeronutronics’ 750 employees beginning in March as it transfers its tactical missile and electro-optical fire-control programs to facilities in Orlando and Ocala, Fla., and Troy, Ala. The company said 150 employees will be offered jobs in Florida and 75 others will be asked to move to elsewhere.
In Glendale, the company will move its Librascope division, where it develops weapon and combat control systems and detection systems, to Manassas, Va. It will offer jobs there to about 70 workers and will lay off the remaining 85, said Jim Tierney, a Lockheed spokesman.
Elsewhere in California, Lockheed will change the lines of authority of several units, but few if any layoffs are expected. Aeronutronics’ Trident valve operation, for instance, will remain in Irvine, but report to Lockheed Martin Federal Systems in Manassas. Tierney said there are no plans now to move the 35 Trident employees.
Wall Street sounded its approval, raising Lockheed’s stock price $1.875 a share to close Monday at $95.625 on the New York Stock Exchange.
“Lockheed is probably the most awesome defense firm in the world, bar none,” said Peter Aseritis, an industry analyst at CS First Boston brokerage in New York.
“They’ve been on a roll and continue to perform very well in terms of new contracts and in terms of exceeding analysts’ financial projections in recent quarters,” Aseritis said. “And they’ve done an excellent job in consolidating acquisitions.”
In addition to Saturday’s contract, Lockheed has won in the last 10 days a $1.1-billion contract for a revolutionary laser weapon system and a $1.8-billion contract for a space-based infrared missile warning and tracking system.
The company, which employs 190,000 people worldwide and has annual sales of $30 billion, said it expects to save $300 million a year through its consolidation. That’s a bit lower than Wall Street’s expectation of $400 million a year, Aseritis said, “but it’s generally in the ballpark.”
For Glendale, the loss of Lockheed nearly closes the chapter on a long history of defense and aerospace operations in the city’s Grand Central area.
“It’s been a period of transition for that part of our town,” said City Manager David Ramsey. “Grand Central was one of the first industrial parks in Southern California. But as the economy picks up, it’s rapidly expanding with media and entertainment firms like DreamWorks and Disney.”
Those being laid off by Lockheed should be able to find jobs in the city, he said.
For Rancho Santa Margarita, however, the loss of Lockheed deals the area a severe blow.
The community has billed itself as a place where people could live and work without getting on freeways. And the Santa Margarita Co., which built the community, has been trying to attract major corporations to its 450-acre business park.
Not only is the business park half vacant, but its other major tenant, Unisys Corp., recently moved its computer plant operations elsewhere and eliminated 250 jobs. And it has 300,000 square feet to fill once Lockheed leaves.
Santa Margarita Co. executives, however, remain undaunted.
“We’ll shortly have another tenant for the Unisys property, and I understand that a major company will be touring the Lockheed facility in next few days to look at it as a possible headquarters,” said John Kelterer, president of RSM Management Co., which manages the community.
