Lockheed CEO Warns Pentagon Cuts Could Hit 10,000 Jobs

Date : 07/18/2012 @ 2:00PM
Source : Dow Jones News
Stock : Lockheed Martin Corp. (LMT)
Quote : 289.12  -0.55 (-0.19%) @ 3:59PM

Lockheed CEO Warns Pentagon Cuts Could Hit 10,000 Jobs

Lockheed Martin (NYSE:LMT)
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   By Doug Cameron 
 

The head of Lockheed Martin Corp. (LMT) on Wednesday estimated that potential U.S. budget cuts could force the country's largest defense contractor to shed some 10,000 jobs, or 8.3% of its workforce.

Robert Stevens, Lockheed's outgoing chief executive, said this was "a very rough 'seat of the pants' estimate" based upon the impact of direct Pentagon cuts and their spillover into nondefense work.

It was the first time that Lockheed has detailed the potential impact of U.S. cuts that could come into force just before November's general election.

U.S. contractors have struggled to define the future size and shape of their businesses due to uncertainty over whether failure to reach a broader agreement on the federal budget will automatically trigger an additional $500 billion reduction in Pentagon spending under the so-called sequestration process.

Mr. Stevens's estimate was given in written testimony as he appeared before the House Armed Services Committee with other defense contractors to outline the impact of the looming automatic budget cuts known as sequestration.

His forecast was based on a 10% across-the-board cut in Pentagon budgets and an 8% drop in nondefense spending, with Lockheed deriving 60% of its annual revenue from the Pentagon.

"We don't know with much precision yet which lines of business, which sites, which contracts, which programs, or which technologies would be affected," said Mr. Stevens in his testimony.

Write to Doug Cameron at doug.cameron@dowjones.com

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