LOCKHEED CEO: We'll Have To Cut 10,000 Jobs If We Go Over The Fiscal Cliff

F35-A night flight

Photo: Lockheed Martin

Lockheed Martin could be forced to layoff as many as 10,000 employees if automatic defence cuts go into effect at the end of the year, the company’s chief executive told the House Armed Services Committee today.CEO Bob Stevens said the defence manufacturer came to that figure based on a 10 per cent across-the-board budget cut at the Department of defence, which accounts for 60 per cent of Lockheed’s total business.

“We don’t know with much precision yet which lines of business, which sites, which contracts, which programs, or which technologies would be affected,” Stevens said. “Since these reductions involve a defined dollar amount for the fiscal year, every day or week of delay in making necessary cost reductions can mean even deeper cuts might be required later in the fiscal year”

Because of federal regulations, the Bethesda, Maryland, based firm will likely be required to issue WARN notifications at least 60 days before laying off any employees. 

“Since we don’t know exactly who will be affected by layoffs … we may have to notify a substantially higher number of our employees beginning late in the third quarter of this year that they may not have a job if sequestration takes place,” Stevens added.

The reductions would come at a time when Lockheed is currently trying to reduce expenses and operating costs, including the loss of 4.4 million square feet of manufacturing space as it consolidates through 2014.

Already, Lockheed has eliminated 18 per cent of its workforce, or 26,000 employees, over the past three years, as it faces greater competition from manufacturers like Boeing and Northrop Grumman.  Today, Lockheed’s payrolls number 123,000.

That’s substantially below a peak in 1996, when the firm employed roughly 190,000 people. 

Shares are up more than one per cent as the market rallies broadly.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.