Raytheon to Cut 5,300 More Jobs, Close 8 Plants
Defense giant Raytheon Co., citing a need to slash costs even further, said Wednesday that it plans to eliminate another 5,300 jobs and close more plants in addition to the 8,700 jobs it previously said would be cut.
This time, though, Southern California was largely spared Raytheon’s ax. And the region has even gotten some relief from the company’s original cost-cutting plans.
When Raytheon announced the initial 8,700 job cuts in January, about 5,200--or 60%--involved employees at facilities stretching from Santa Barbara to San Diego, with the brunt occurring at the former Hughes Aircraft enclave in El Segundo.
But as the restructuring has proceeded, it now appears that 900 fewer jobs, or 4,300, will actually be eliminated, said Raytheon spokesman Jim Knotts in El Segundo.
Raytheon said it plans to close an additional eight defense plants and offices, but only one, in San Jose, is in California. The others are in Texas, South Carolina, Massachusetts and Washington.
The job cuts and plant closures are part of Raytheon’s aggressive push to lower costs in the aftermath of its purchase in December of Hughes Electronics Corp.’s defense electronics business, and its earlier acquisitions of defense contractor E-Systems and the defense lines of Texas Instruments Inc.
Raytheon’s moves reflect how the defense industry, despite already undergoing enormous upheaval, remains in turmoil in an era of post-Cold War military budgets and in the aftermath of a merger spree.
The job cuts “are difficult and painful, but are absolutely necessary to ensure a productive and viable future” for the company, Raytheon President Daniel Burnham said in a statement.
“We are committed to treating our employees with dignity and respect during this process,” he said, adding that those laid off would receive “a benefits package as well as career transition assistance, as we have done in the past.”
Lexington, Mass.-based Raytheon now plans to eliminate 14,000, or 16%, of the 87,000 jobs at its defense group, Raytheon Systems Co., over the next two years. Raytheon also has interests in construction, engineering and general aviation aircraft such as Beech airplanes.
Raytheon hired Burnham, former vice chairman of industrial conglomerate AlliedSignal Inc., in June, and he’s expected to succeed Dennis Picard as Raytheon’s chief executive when Picard retires in December.
“It’s clear that Burnham is having an early impact at having Raytheon address a tough business environment,” said John Hayes, an aerospace analyst at Independence Investment Associates in Boston.
Raytheon also said the restructuring would produce an after-tax charge of $284 million, to be taken against its third-quarter results, which will be announced Oct. 20.
But Burnham also said Raytheon’s third-quarter earnings, excluding such one-time charges, “would be slightly below” analysts’ estimates, owing mainly to weakness in Raytheon’s engineering and construction division.
Raytheon’s announcement came after the markets closed Wednesday. Earlier, Raytheon’s Class B stock rose $1.75 to close at $58 in composite trading on the New York Stock Exchange.
