Northrop Grumman Corp. said Monday that it planned to reduce its work force by 8,000 people, or about 15 percent, by the end of 2000 as it tries to remain competitive as an independent aerospace company.
The announcement of the cutbacks, most of which will be in Southern California, comes a month after the planned acquisition of Northrop by Lockheed Martin collapsed in the face of government antitrust concerns. Since then, Northrop, the nation's fourth-largest aerospace company, has seen its stock plunge to about half its peak value amid doubts about whether the company can survive in an industry dominated by three larger rivals: Boeing, Lockheed and Raytheon.Northrop has maintained that it can compete and prosper on its own, and Monday's announcement was part of the effort to do that.
"Now that we knew that we were going to be independent, we wanted to get on with life," Kent Kresa, the company's chairman and chief executive, said in an interview. He said Northrop would have taken such action "many months earlier" had it not been waiting for the deal with Lockheed to be completed.
Byron Callan, a Merrill Lynch analyst, said the cutbacks were part of a trend for weapons companies, adding, "They are focusing on their competitive strengths versus one another rather than on what they can buy next."
Northrop's stock, which initially rose on the news, fell 12.5 cents to close at $68.6875 - about half its 12-month high of $139 when it looked as if the merger would be completed and well below the $90 or so at which the shares traded last month.
Aerospace stocks have been weak in general partly because of the Asian economic crisis and the feeling that the era of acquisitions is now over, said Paul Nisbet of JSA Research in Newport, R.I.