Lockheed Raises Cost-Cutting Target By 54 Percent to $4 Billion
By Josh Fineman
Lockheed Raises Cost-Cutting Target By 54 Percent to $4 Billion
Bethesda, Maryland, Feb. 17 (Bloomberg) -- Lockheed Martin Corp., the world's largest defense contractor, said it's ahead of schedule on a cost-cutting program and raised the amount of targeted savings by 54 percent to $4 billion.
The company last year achieved about $1.4 billion in savings, up from the $520 million targeted when it began the Lockheed Martin in the 21st Century, or LM 21, program in 1998.
Lockheed has been hobbled by problems on its C-130J transport plane, Titan IV rocket and lack of demand for its commercial satellite. The company issued several profit warnings last year that caused its stock to lose almost half its value. It said last month it will cut about 2,800 jobs in its aircraft and space divisions as part of a restructuring to restore profits. ``It worked better than expected, so we see there can be more savings realized,' said Hugh Burns, a Lockheed spokesman.
The cost-cutting program is being headed by Michael Joyce, who was appointed vice president of Best Practices.
Lockheed, based in Bethesda, Maryland, has identified 200 of the best practices being used throughout the company's four main businesses to improve efficiency and save money. The goal is to share those practices among all parts of the business -- manufacturing, program management, procurement, engineering, accounting and personnel.
The cuts announced last month are expected to generate about $200 million in annual savings.
Lockheed Martin shares rose 1/4 to 18 in New York Stock Exchange trading. They've fallen 50 percent over the past year and the company was the second worst performing stock of the eight stocks in the Standard & Poor's Aerospace/Defense Index.
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