Exclusive-US defense contractor L3Harris to cut 5% of workforce to save costs, email shows
2:59 pm Tuesday, April 23rd, 2024
By Utkarsh Shetti, Nathan Gomes and Mike Stone
(Reuters) – U.S. defense contractor L3Harris Technologies Inc will cut 5% of its workforce this year as part of a cost saving measure, CEO Chris Kubasik said in an email to employees seen by Reuters on Tuesday.
The cuts represent about 2,500 of the roughly 50,000 employees the company had as of the end of last year, according to its annual filing. L3Harris is set to report its first-quarter results on Thursday.
The cuts are not evenly distributed but aim to eliminate redundancies across all functions at the company, a person familiar with the situation said, adding the reductions did not necessarily focus on the Aerojet Rocketdyne divison, which L3Harris acquired for $4.7 billion in December 2022.
Mergers often generate layoffs because companies cull jobs that are deemed duplicative.
L3Harris is “right-sizing” its workforce as part of a streamlining in operations to deliver on its LHX NeXt commitment of $1 billion in cost savings over the next three years, a company spokesperson said in a statement, without confirming the number of employees affected.
LHX NeXt is L3Harris’ multiyear plan to trim cost and increase efficiencies in its operations.
The company said in December that it would suspend its merger and acquisition activity for the “foreseeable future” to strengthen its balance sheet, and outlined capital deployment priorities for two years which include research and development investments and debt payment, and utilization of excess cash for dividend increases and share buybacks.
It also announced in December that its board appointed an ad-hoc committee to review the company’s operational performance, cost structure, and portfolio composition.
The cuts come as companies across sectors have resorted to layoffs in a bid to cut costs and improve bottomlines.
In January, Reuters was first to report that rival defense contractor Lockheed Martin would implement a 1% reduction in its workforce over the course of the year, seeking to reduce costs.
U.S. defense contractors’ margins remain marred by headwinds from labor and supply snags which began during the pandemic, even as they see a notable increase in orders amid the ongoing conflicts in the Middle East and between Russia and Ukraine, and escalating tensions between China and the Philippines.
L3Harris, formed by the merger of L3 Technologies and Harris Corp in 2019, counts the Pentagon, planemaker Boeing and defense and aerospace major RTX among its customers.
(Reporting by Utkarsh Shetti, Nathan Gomes in Bengaluru and Mike Stone in Washington; Editing by Daniel Wallis)
