The idea behind the layoffs is that Lockheed Martin will be able to bid lower on federal contracts and and win more work. Lockheed Martin officials said an internal review concluded that in recent years the two companies had laid off 10,000 employees because inefficiencies and inflated cost structures had caused them to lose some key contract awards. The company's board approved the actions last Friday, and the firm planned to make its announcement this coming Friday. But speculation was so intense, and so many rumors were circulating, that executives decided to move up the announcement. The company was operating on a fast track to make the announcement only three months after the merger that made Lockheed Martin the world's biggest defense company.
Most merged firms take six or eight months to make such key decisions.
The company said 12,000 of the layoffs are a result of finding overlap in the merger of Martin Marietta Corp. and Lockheed Corp., such as in computer functions, auditing, payroll, research and human relations. Five thousand job cuts will come this year and 3,000 next year. Moreover, the firm announced it is laying off 7,000 other employees because of a downturn in its defense and space business. It said it may have to lay off still more employees if that business doesn't pick up.