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Bracing For Cuts, Military Firms Shed Workers - U. S.

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Tightened spending at the Pentagon is unsettling the defense industry, with Lockheed Martin announcing Wednesday that one-quarter of its executives had applied for buyouts as the company cut costs.

Officials said most of the 600 executives requesting the buyout were at or near retirement age. But the response shows how significantly the industry has begun to contract as a long surge in military spending comes to an end. Lockheed had expected only 200 or so executives to apply, the company said. Nonetheless all 600 requests are expected to be honored.

The retrenchment at Lockheed, the world’s largest military company, seems likely to heighten concerns about further job cuts in the high-paying aerospace and defense industries at a time when the nation’s unemployment rate remains high. Lockheed has reduced its work force by 10,000, to a total of 136,000, since the beginning of last year.

Boeing, another big Pentagon contractor, said Tuesday that it would cut the number of executives in its military aircraft business by 10 percent as part of broader consolidation that will eliminate more than 400 jobs.

The company, which also makes commercial jetliners, has already trimmed 1,700 jobs in its military business as part of a reduction of 10,000 jobs across the company.

And Northrop Grumman recently announced plans to close troubled shipyards as it considers spinning off its $6 billion shipbuilding business.

Northrop announced in late August that it would lay off 642 workers at its shipyard in Pascagoula, Miss., by the end of the year. By 2013, it plans to close a shipyard near New Orleans that employs 4,700 people and shift the work to Pascagoula.

The loss of jobs comes as the defense secretary, Robert M. Gates, has canceled or restructured nearly three dozen weapons programs since last year. And as the growth in military spending slows, Mr. Gates is pushing for more overhead cuts and greater efficiency to free money for the most crucial programs.

Pentagon officials have said they are singling out wasteful spending and that the belt-tightening would not necessarily lead to job losses.

But top industry executives say that it would be hard to meet Mr. Gates’s goal of saving $100 billion over the next few years without cutting jobs and closing plants, and that could stir Congressional opposition to some of the proposals.

“It seems that many senior executives expect the future to be less bright, and some of them may be pretty smart to take the buyout since their next chance to get out could be on far less attractive terms,” said Loren B. Thompson, a Lockheed consultant. He said the buyouts and recent layoffs “are a sure sign that things are deteriorating for the industry.”

Lockheed’s chief executive, Robert J. Stevens, said in a statement on Wednesday that the 600 buyouts would “enable us to achieve significant cost savings and a leaner management structure at a time when our customers have an urgent need for more affordable solutions to the global security challenges they face.”

Lockheed officials said the buyout offer had been extended to vice presidents as well as directors, a title accorded to many program managers and department heads. The terms were fairly generous. Executives with 20 years at the company could receive a lump sum equal to 1.25 times their annual base pay, as well as $2,000 for each year they had been at the company to help pay for their own health insurance.

The company said so many people took the offer that it would have to hire some replacements. It could not immediately say how much the buyouts would save.

Some big job losses.

Retrenchment is everywhere.

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