While Making Massive Acquisitions and Record Profits, Lockheed Martin Cuts Jobs

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A Sikorsky CH-53 military helicopter on June 1, 2016 in Schoenefeld, Germany, at the ILA 2016 Berlin Air Show. Photo by Sean Gallup/Getty Images. 

By Michael Tracey

Lockheed Martin, the arms manufacturer behemoth lobbying for corporate tax cuts, has suggested that lower corporate tax rates would allow it to increase its domestic employment, but the company’s financial filings show a decade-long pattern of acquiring companies and then shedding thousands of workers in the aftermath.

As TYT previously reported, Lockheed Martin CEO Marillyn Hewson has appeared with President Trump at events intended to boost his economic agenda, including corporate tax cuts. Hewson and others at the company belong to trade groups pushing for tax cuts, and the company has deployed its own lobbyists and outside firms to push for tax cuts on Capitol Hill.

A senior director at Lockheed Martin—a former high-ranking Air Force official—was one of several former military officers now in military contracting who spoke to TYT last month and were unable to identify a connection between tax cuts and industry hiring.

Nor is it clear that Lockheed Martin needs a tax cut to afford new workers. The company reported record profits of $5.3 billion last year, and as of the third quarter of 2017, had $2.9 billion cash on hand. In September, the company’s board of directors authorized an increase of $2 billion to spend on buying up shares of Lockheed Martin stock.

The company’s largest recent expense, by far, however, was an acquisition that was followed by thousands of job cuts, according to financial filings and local press accounts.

In November 2015, Lockheed Martin acquired Sikorsky, the Stratford, Conn., helicopter manufacturer, for $9 billion. It was the company’s largest acquisition since 1996. Sikorsky reported having nearly 15,000 employees at the time it was acquired.

Two months later, in a January 26, 2016, earnings call, Lockheed Martin CTO Bruce Tanner touted the potential for Sikorsky to “be a stronger cash generator under our ownership than what it was previously.” He elaborated, “So, we know the game plan. We know the playbook. We just have to sort of execute it with Sikorsky.” Tanner made no indication that preserving Sikorsky jobs would take priority.

Less than a year after the acquisition, despite reported assurances to Sikorsky employees that their jobs would be secure, Lockheed Martin laid off 150 Sikorsky workers, after previously announcing it would eliminate 350 positions at the Lockheed Martin division that includes Sikorsky. Lockheed Martin spokesperson Chris Williams attributed the Sikorsky layoffs to a “thorough analysis of the Sikorsky business” and declared “this action is necessary if we are to remain competitive in the marketplace, secure future business opportunities, and keep our infrastructure aligned with customer demands.”

A year later, in August 2017, another 160 workers were laid off at a Sikorsky facility in Troy, Alabama.

Despite the influx of 15,000 Sikorsky personnel at the end of 2015, Lockheed Martin’s total headcount a year later was lower than it had been before. By the end of 2016, Lockheed Martin’s total employee headcount stood at 97,000, a 23 percent drop from the 126,000 employees the company reported at the end of 2015.

It’s not clear how much of that drop was related to the Sikorsky purchase. Upon acquiring Sikorsky, Lockheed announced that it would integrate the company into its Missions Systems & Training division, and not break out individual data for Sikorsky.

However, in its most recent annual filing, Lockheed Martin reported that in 2015, it paid out $67 million in severance in that division, now known as Rotary and Mission Systems.  

Some of the Sikorsky layoffs have been challenged in court. In a previously unreported lawsuit filed last year, Millard C. Bibey, an avionics technician, accused Lockheed Martin and Sikorsky of wrongful termination, and sought whistleblower protections under Pennsylvania and federal law.

Bibey claims he was charged with overseeing the hiring and assessment process for Sikorsky global helicopter division in Coatesville, Penn., and that he found it to be “highly flawed.” He said he had discovered hundreds of employment assessments dating back to 2008 that violated FAA regulations.

After alerting his superiors to what he deemed a potential safety hazard, Bibey claims he was ordered to destroy records showing improprieties. The records were “thrown into trashcans and recycled,” he said. Bibey claims he was subsequently interrogated by superiors about the details of his non-monogamous marital relationship, about which human resources had obtained Facebook photos. Shortly after, he was terminated.

Lockheed Martin has made multiple motions to dismiss the suit, which have been denied. As of October 19, Lockheed had entered into negotiations for a settlement. An attorney for Bibey, Matthew Weisberg, said his client’s whistleblower status was “pending,” but declined to comment further.

Lockheed Martin has also declined to comment, but its financial filings show that Sikorsky is only the biggest example of a trend toward investing billions of dollars not in hiring but in acquisitions—followed by layoffs.

Since 2011, Lockheed Martin has made at least ten acquisitions. This totaled more than $11 billion spent on acquisitions between 2011 and 2016, during which its headcount fell by 21 percent.

With the exception of 2015, when the end-of-year acquisition of Sikorsky momentarily boosted its workforce, Lockheed Martin has cut jobs every single year since 2008, when it reported 146,000 workers. All told—despite record profits, an expanded footprint overseas, and domestic acquisitions—Lockheed Martin has simultaneously eliminated one third of its jobs.

You can find all of our reporting on this here: TYT Investigates Series: Tax Cuts & Job Creation – Lockheed Martin.

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Click here for TYT Investigates’ series on Fed Ex & UPS’ push for tax cuts as job-creation tools.

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