Lockheed Martin To Cut 2800 Jobs

Lockheed Martin To Cut 2800 Jobs Streamlines Aeronautical And Space Businesses Expected Savings Total $200 Million

Bethesda, Maryland, January 27, 2000 -Lockheed Martin Corporation today announced actions to streamline its Aeronautical Systems and Space Systems business areas in a move to improve business operations by reducing general and administrative costs, speed decision-making processes and focus resources on program execution. These actions are expected to generate $200 million in annual savings and result in a reduction of more than 2800 employees. The majority of the savings will be achieved in the Aeronautical Systems business area and will be realized by the streamlining of the management structures, the centralization of core administrative functions and consolidation of selected 

Aeronautics activities in engineering, production operations and material management. In conjunction with these actions, the Corporation expects to incur severance and other related expenses in the near term. However, the financial effects associated with these expenses will be off-set by cost reductions and are not expected to affect the previously announced earnings outlook. "These actions are the direct result of our continuing drive to improve our customer focus, flatten our management structure and enhance our financial performance," stated Vance Coffman, Chairman and Chief Executive Officer of Lockheed Martin.

"They will result in real savings and ensure greater flexibility allowing us to successfully adapt to changing market conditions, maintain the level of program execution our customers expect, while improving our ability to react to new business opportunities," he said. Effective immediately, the Aeronautical Systems business area will consolidate its organization and operations into a focused one-company structure named the Lockheed Martin Aeronautics Company headquartered in Ft. Worth, Texas. The organization will be led by Dain Hancock, a Lockheed Martin Corporate Executive Vice President. Within this one-company structure, the Palmdale, California site will remain engaged in advanced development initiatives. The Ft. Worth, Texas and Marietta, Georgia facilities will concentrate and focus on aircraft production and assembly. In addition to these sites, four subassembly plants in Clarksburg, West Virginia; Johnstown, Pennsylvania; Meridian, Mississippi and Pinellas, Florida also will report administratively to the new Lockheed Martin Aeronautics Company.

This streamlining of the Aeronautical Systems business area reflects an adjustment to market conditions and is intended to reduce duplication and administrative costs while improving customer satisfaction. The workforce reduction announced today will total 2500. These actions are expected to come in approximately equal measure from the company's three primary sites in Georgia, California and Texas. Today's announced layoffs, plus the 2000 person reduction previously announced for the Marietta, Georgia facility, bring the business area's total announced workforce reduction to 4500. Reductions have been on-going since September 1999 and will be completed within 18 months, with most actions completed prior to the end of 2000. These actions are expected to generate annual savings ranging from $160 to $175 million.

In a similar fashion, the Space Systems business area will integrate its organization and operations by establishing a new Lockheed Martin Space Systems Company in Denver, Colorado. This company will be led by Albert Smith, Lockheed Martin Corporate Executive Vice President. Denver Operations President and General Manager Tom Marsh will join Smith in this new office as his deputy. Reporting to the Space Systems Company are operations in Sunnyvale, California, Denver, Colorado and New Orleans, Louisiana. In addition, Special Programs, International Launch Services and Commercial Space Systems will also report to Smith in this new organization.

Reductions in the Space Systems business area are focused on management realignments and consolidations of staff support activities such as finance, human resources, legal and communications. Total workforce reductions are expected to be 300-400, of which approximately 60 percent will come from Sunnyvale, 30 percent from Denver, and 10 percent from Michoud. These actions are expected to generate annual savings in the $30-$40 million range and are effective immediately.
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