Having been in the defense industry for the past two decades, we have emerged as the leading weapons and security company in the sector. With the U.S. defense department as our client, we had to lay off 4000 employees in 2013, in light of the budget cuts approved by the government.
The budget cuts had a direct impact on our revenues, and we felt the need to lay off employees, and close down our divisions in certain locations throughout the country. The slump in demand, made it necessary for us to reduce 3.5% of our workforce, and close down six locations in Ohio, Horizon City, Arizona, Newtown and Akron. We also had to close down 4 of our buildings in the Sunnyvale California campus, with a collective job cut of 2000 Lockheed Martin employees.
Around 2000 more employees were laid off at various locations throughout the country, within three different divisions of the company. The employees from the space systems unit, global solutions and information systems unit, and the mission system and the training unit section of the company, were laid off.
Marilyn Hewson, who was the then CEO of the company explained the need for these drastic measures, by blaming the budget cuts on the complexity of the security landscape on a global level. Though not ideal decisions, but employee layoffs became necessary for the survival of the company.
Our business was completely dependent on government spending, with federal contracts constituting around 80% of our total revenues, amounting to a colossal $39 billion as of 2012. The budget cuts in defense spending, robbed our company of our major earning, which necessitated the need for urgent layoffs and the closure of multiple divisions and company locations.
Ever since 2008, we have had to cut around 30,000 job positions; which amounts to around 20% of our entire global staff. In this way, we were only left with a total employment number of 116,000.
The value of our shares saw a spike after the announcement of the layoff. With improved share value, its value spiked to around 50% in that year. The global security uncertainty and the major budget cuts promoted us to take a step to lay off employees on such a large scale.