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Grumman To Cut 1,900 Jobs, Cites Pentagon Cuts

April 3, 1991

NEW YORK (AP) _ Grumman Corp. said Tuesday it will eliminate 1,900 jobs by year’s end, joining a growing list of defense contractors that have slashed payrolls in response to sharp Pentagon budget cuts.

The maker of the Navy’s F-14 fighter and the A-6 bomber said it will lay off 1,200 to 1,300 workers and cut another 600 to 700 jobs through attrition by the end of the year.

The announcement follows staffing reductions by General Dynamics Corp., McDonnell Douglas Corp. and other defense giants squeezed by Congress’ determination to cut military spending in the post-Cold War era.

Defense Secretary Richard Cheney has said he wants to reduce military spending by 25 percent during the next five years.

″The pipeline is empty,″ said Jerry Cantwell, an analyst with Wertheim Schroder & Co. in New York. ″Defense spending is continuing to go down. Without some major reversal, that’s it. These guy’s are in a downtrend.″

In an open letter to employees, Grumman Chairman Renso Caporali blamed the job cuts on reduced defense spending and the company’s need to become more competitive in a shrinking market.

Grumman’s setbacks during the past year include the loss of a program to upgrade existing F-14s and the conclusion of its A-6 program, Caporali said.

The company, which reported revenues of $4 billion during 1990, also has had to scale down its Space Station Support Division because of reductions in the NASA budget.

″We must match our work force to the work load and keep Grumman focused on quality, efficiency and customer satisfaction,″ Caporali said, echoing a theme that has reverberated throughout the defense industry.

Despite the stunning performance of many high-tech weapons during the Gulf War, contractors large and small are in a financial pinch.

General Dynamics laid off 3,500 workers in January at its Ft. Worth, Texas, plant, where workers build the F-16 fighter and components for the F-111 fighter-bomber. The company plans to eliminate another 2,000 jobs by the end of the year, reducing the work force to 19,000, the lowest level since 1985.

McDonnell Douglas plans to lay off 5,000 workers at its St. Louis aircraft plant. And General Electric said it will cut 1,500 jobs by 1992 because of declining defense budgets.

McDonnell Douglas and General Dynamics blamed their layoffs on Cheney’s decision to cancel the Navy’s $52 billion A-12 stealth bomber, for which they were prime contractors. Designed to replace the A-6, the plane was a year behind schedule and more than $1 billion over budget.

Even the success of the Patriot ″Scud buster″ missile during the war didn’t spare its maker, Raytheon Corp., from laying off 146 workers in its missile division late last month. Since January, Raytheon has laid off 1,000.

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