The world’s largest defense contractor will divide its largest operational unit, Electronic Systems, into Missiles and Fire Control (MFC) and Mission Systems and Training (MST) business areas effective Dec. 31, the company announced Oct. 8.
The move will leave Lockheed with five business units, with MST and MFC joining Aeronautics, Information Systems & Global Solutions, and Space Solutions. The Electronic Systems unit was the largest revenue generator for Lockheed in 2011, bringing in $14.6 billion and edging out the Aeronautics division by $0.3 billion. The division also had substantial overhead, with 30.2 million square feet, roughly 38 percent of the company’s total footprint, according to the company’s 2011 annual report.
Although the unit had been growing, the 1.5 percent revenue increase from 2010 to 2011 paled in comparison with the nearly 10 percent spike in Aeronautics’ revenue.
Lockheed said the move will affect roughly 200 jobs, a large block of which are executive positions, and will save roughly $50 million per year.
“For the past three years, Chris [Kubasik, company COO] has led an effort to examine all aspects of our business in an environment where every dollar counts,” Bob Stevens, Lockheed Martin chairman and chief executive officer, said in a company news release. “This focus on maximizing value for customers and shareholders has already identified billions in savings for our customers and made us more competitive.”
The MFC unit will include about 16,000 employees and will be based in Dallas. The unit’s most noteworthy program will be the Joint Light Tactical Vehicle.
The MST unit will include about 19,000 employees and will be based in Washington. The unit will be responsible for the littoral combat ship and the Aegis system.
Lockheed, which is headquartered in Bethesda, Md., has had a good first two quarters this year, increasing its outlook for 2012 during its most recent earnings call in July. The company’s stock has also climbed, up from $82 per share to start the year to more than $94 at the close of the markets on Friday.