Bloomberg News

Lockheed Cuts Furloughs to 2,400 as Shutdown Pressure Eases (2)

October 07, 2013

Lockheed Martin Corp. (LMT:US) today reduced furloughs by about 20 percent after the Pentagon said most civilian employees sent home in the partial U.S. government shutdown will be put back to work.

The top federal contractor had planned to furlough 3,000 people. About 2,400 of those employees, most of them tied to nondefense programs, are still unable to work because civilian government sites are closed or the Bethesda, Maryland-based company has received an order to stop work from agencies, Lockheed said in a statement.

The Pentagon said on Oct. 5 that 90 percent or more of about 350,000 employees it furloughed last week will be coming back, including inspectors who are needed to review contract work. While the decision prompted United Technologies Corp. (UTX:US) to cancel plans for as many as 4,000 furloughs, other contractors continue to cope with pressures from the government’s partial closing.

“The Department of Defense’s decision will not eliminate the impact of the government shutdown on the company’s employees and the business,” Lockheed said in its statement.

Of the Lockheed employees still being furloughed, only 300 work on military programs.

Furloughed Workers

About 82 percent of Lockheed’s $47.2 billion in sales in 2012 came from the U.S. government -- including 61 percent from the Pentagon, according to a Securities and Exchange Commission filing. The company does work for a number of federal agencies, including the Department of Veterans Affairs, the Energy Department, the Department of Health and Human Services and the National Aeronautics and Space Administration.

Lockheed’s furloughed workers are spread across 27 states, with most of them based in the Washington area, Gordon Johndroe, a spokesman for the contractor, said in an e-mail.

Computer Sciences Corp. (CSC:US) also furloughed “some employees whose workload is substantially decreased as a result of the government shutdown,” Heather Williams, a spokeswoman for the Falls Church, Virginia-based contractor, said in an e-mail today. She didn’t say how many staff were on leave and where they worked.

Booz Allen Hamilton Holding Corp. (BAH:US) hasn’t furloughed staff, said James Fisher, a spokesman for the McLean, Virginia-based company. Instead, he said the company has given some staff the opportunity to take paid time off.

Fisher didn’t say how many people had taken the company up on its offer.

Options Considered

Booz Allen is “considering a variety of options, pending the length of the shutdown and any developments,” Fisher said.

Boeing Co. (BA:US), the No. 2 federal contractor, hasn’t ruled out sending employees home.

It said last week it may begin “limited furloughs” this week. While the return of most Pentagon civilian employees has “at least delayed the need for furloughs at some Boeing facilities,” the shutdown may still lead to furloughs, said Meghan McCormick, a spokeswoman for the Chicago-based company.

So far, United Technologies, the government’s sixth-largest contractor, is the only top federal vendor to completely backtrack on furloughs.

The company previously had planned to put 2,000 workers on leave beginning today at its Sikorsky Aircraft unit after military inspectors required to monitor production work were put on leave. Another 2,000 workers at the Hartford, Connecticut-based company’s Pratt & Whitney and UTC Aerospace Systems had faced furloughs this week.

Act Quickly

“United Technologies greatly appreciates the efforts of those in the administration and Congress who facilitated the recall of the furloughed civilian employees,” the company said in an e-mailed statement yesterday.

Robert Hale, undersecretary of defense, said on Oct. 5 that he had no concrete estimate for how many civilian defense employees would remain off the job during the shutdown. Some of those who won’t return include staff in information technology, auditing and public affairs, he said.

“We haven’t solved all the problems,” Hale told reporters on a conference call. “We still hope Congress will act very quickly to end this shutdown.”

The Aerospace Industries Association, an Arlington, Virginia-based trade group, said in a statement last week that companies had voiced concerns that if the shutdown continued, they would be forced to furlough tens of thousands of workers.

Intelligence Agencies

A U.S. unit of London-based BAE Systems Plc (BA/) said last week it had excused from work about 1,000 employees in its intelligence and security division.

As many as 10 percent to 15 percent of the 34,500 U.S.- based employees of BAE Systems Inc., its U.S. unit, may be affected by the shutdown, the company said last week.

Brian Roehrkasse, a spokesman for the division, didn’t provide comment on whether any of its workers may be reinstated or protected from the shutdown after the Pentagon decision.

“Many of those 1,000 workers who were excused by their government agencies” support intelligence agencies, not the Defense Department, Roehrkasse said in an e-mail yesterday.

To contact the reporter on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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Companies Mentioned

  • LMT
    (Lockheed Martin Corp)
    • $175.15 USD
    • 0.05
    • 0.03%
  • UTX
    (United Technologies Corp)
    • $109.39 USD
    • -0.67
    • -0.61%
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