Manufacturing at Marietta

[Jansen]

While researching LM's manufacturing, I stumbled across "A Model Airplane" in Capacity Magazine published in Fall of 2008. It's a little old, but gives quite a history about the plant in Marietta where the Hercules is produced.

Still quite relevant as LM is increasing the build rate to 36 aircraft per year.

http://www.capacity-magazine.com/wmspage.cfm?parm1=358

[Jansen]

I was going through documents from the 2009 Hercules Operators Conference, and found some good info on the increase in the build rate from Ross Reynolds' C130 Program Update.

This is the picture from 2009:

Current Aircraft Production Line: Toolset / Facilities Designed to Produce 36 Aircraft per Year

Current Production Rate:

24 aircraft per year

10 Day Move Rate

Line Loaded

Moderate 1st Shift / Light 2nd Shift

Ramp Up Plan:

Supports 16 in ‘09, 27 in ‘10, and 35 in ‘11

Fully Loaded Line

7 Day Move Rate

Heavy 1st Shift / Moderate 2nd Shift

[Jansen]

I just got a list of current and projected C-130J orders and it extends into 2016, even assuming full-rate production of 36 aircraft per year. It looks like quite a bit of job security for the guys in Marietta.

There are over 1000 Herks out there that will need to be replaced. Even with the AMP and center wing replacement programs and competition from the KC-390 and A400M that still means years of production.

[Jansen]

Information from several sources confirms a production rate of 36 aircraft per year for at least the next two years.

Specifically, FY 2012 Federal Budget documents state: "The production rate goes to 36 in CY11 and will remain there for two years."

There are planned orders for at least 165 more aircraft from the USG through 2018, but will not yet be funded until latter budgets. I do not anticipate the production rate going below 25 through CY 2018.

[Jansen]

It looks like they are trying to reduce costs by retiring their most senior guys. F-22 production is ending, and even though there is still a lot of future work on the C-130J, F-35, and C-5 lines, it unfortunately won't be for some time. The C-5 program is still in LRIP, the F-35 won't hit full production for five years, and Embraer is hyping the low costs of the KC-390, so I can understand why the company is taking action now. They could save $75-100 million a year based on these figures, but it still sucks.

Lockheed Martin Aeronautics To Eliminate About 1,500 Positions, June 30th, 2011 -- Lockheed Martin [NYSE: LMT] today announced there will be reductions in employment across its Aeronautics business area as part of a plan to improve the affordability of its products and increase operational efficiency.

Lockheed Martin currently has about 28,000 employees at its principal Aeronautics sites in Texas, Georgia and California and at six smaller locations in as many states. Reductions may occur across the enterprise, with the greatest impacts occurring at the larger sites. An organizational assessment will determine how to trim the organization with a target reduction of approximately 1,500 employees.

Ralph D. Heath, executive vice president, Lockheed Martin Aeronautics, said, “Bold and responsible action is necessary to meet customer expectations and reduce our costs. We are realigning the organization to be more efficient and agile, and a reduction in force will enable us to meet the requirements of our changing business environment.”

Lockheed Martin will offer eligible salaried employees an opportunity for a voluntary layoff to minimize the number of involuntary layoffs. We will use a disciplined process to review every organization and position, considering all factors rather than making arbitrary reductions. We expect the greatest impact to be on employees in higher level labor grades. Employees eligible for voluntary layoffs will be notified in August. An involuntary reduction in force begins in mid-September.