Northrop Lays Off 71 Workers at Woodland Hills Facility

Northrop Grumman Corp. said it will lay off 71 workers at its Navigation Systems division in Woodland Hills in June due to contract delays and cancellations. The company said it’s also eliminating jobs at other U.S. facilities as result of a reduced workload. “This workforce reduction action is regrettable, but unavoidable,” Northrop said, in a written statement. “It is imperative that the company properly adjusts the staffing levels to accommodate anticipated business needs going forward.” The Woodland Hills facility employs 1,400 workers. It’s a center for research and development and some manufacturing of gyroscopes, high-powered computers and components that go into aircraft cockpits. Northrop isn’t the only defense company laying off workers amid federal budget cuts aimed to reduce government spending and tackle the growing deficit. Defense contractors, including Raytheon, Lockheed Martin, and Boeing Corp. are making similar workforce cuts as the Pentagon and foreign militaries hold off on issuing new work contracts, or eliminate programs altogether. General Dynamics is laying off more than 100 employees from a facility in Virginia due to the cancellation of the $15 billion expeditionary fighting vehicle for the U.S. Marine Corp. Cuts at Northrop’s Navigations Systems division, which includes six workers from a manufacturing plant in Salt Lake City, are tied to delays and cancellation in domestic and international contracts, the company said. The positions being eliminated include software, electrical and mechanical engineers, program and systems engineering managers, and government marketing sales managers, according to the layoff notice filed with California’s Employment Development Department. A spokesperson for Navigation Systems did not give details on the contracts that prompted the layoffs. Northrop CEO Wes Bush was no more forthcoming during a conference call with analysts in late April to discuss first-quarter earnings. Bush did say, in the conference call, that continuing resolutions passed by Congress to keep the federal government operating was holding up new contracts and “also negatively influenced customer willingness to spend on some existing contracts.” Reductions in certain programs are “inevitable,” Bush continued, and Northrop is positioning itself for an environment where deficit reduction is a higher priority for federal lawmakers. “Our challenge is to continue to anticipate the needs of our customers and aggressively address our cost structure, operational execution, and productivity,” Bush said. ‘More scrutiny’ Pressure from broader economic and fiscal concerns means defense budgets are no longer untouchable, as they were during the George W. Bush Administration and the first couple of years of the Obama Administration, said Ken Herbert, vice president of research with Wedbush Securities in San Francisco. “There is going to be more debate, more scrutiny and more attention to detail,” Herbert said. Northrop’s Navigation Systems division is part of Electronic Systems, one of the company’s four main business sectors. Electronic Systems is a supplier of parts and components to dozens of military, aerospace and commercial programs. Headquartered near Baltimore, Electronic Systems laid off 140 workers at facilities on the East Coast because of uncertainty surrounding various military contracts, a company spokesman said. The sector employs more 8,000 workers in the Baltimore area. The decision to close the Defense Department’s U.S. Joint Forces Command in Norfolk, Va. resulted in layoff notices for 293 employees in Northrop’s technical services sector and 32 employees in the information systems sector, according to the Worker Adjustment and Retraining Notification with the Commonwealth of Virginia. In the first quarter, revenues in the Electronic Systems sector were $1.8 billion, a 4 percent drop from the revenues of $1.9 billion for the same period last year. Delays in contract awards from foreign governments grappling with their own budget issues hurts the sector’s numbers, Bush said in the April 27 conference call. “We see delays there,” Bush said. “There are some downward pressures that are similar or even more severe than what we’re seeing here, but it’s primarily delays that we’ve been observing.” While European markets and some countries in Asia are facing budget crunches, growth opportunities in the Middle East, India and Brazil can help to offset order reductions in North America and Western Europe, Herbert said. Northrop said its long-term business outlook for the Navigation Systems division remains promising. “The company continues to be well-positioned in key growth markets,” Northrop said. Workers losing their jobs will receive a separation package and assistance in finding new positions, including opportunities at other Northrop Grumman facilities, the company said.