The L3 Technologies plant in Waco has gained the attention of the defense giant’s new CEO Christopher Kubasik, who mentioned the facility during a conference call Thursday on L3’s financial results during the fourth quarter of 2017.
The plant, which specializes in modifying and maintaining military aircraft and installing customized interiors on aircraft used by dignitaries and foreign heads of state, has suffered four rounds of layoffs the past four years, the most recent reduction of 124 jobs coming in September.
Though the facility remains Waco’s largest industrial employer, it has seen staffing slide from a peak of about 1,800 to an estimated 1,300 in recent years, according to information L3 provided the city of Waco in its pursuit of $1.25 million in state Enterprise Zone Program money. It proposes to use the funds to help offset an estimated $5.5 million in facility and equipment upgrades at the Waco facility, whose operations have been merged with those in Greenville, another plant in L3’s Aerospace Systems unit.
Kubasik said he is “not happy” with the perfomance of Aerospace Systems and that its market “has been shrinking,” and that it faces a “key year” in 2018. Quotes from the conference call come from a transcript published at SeekingAlpha.com.
Focus on Waco
“The main focus is on Waco,” Kubasik added. “We need to get more base in there, and we have a bid for the P-8 depot award. We expect two (contract) awards hopefully in the first quarter, maybe early second quarter, and our goal is to get one of those two awards.”
The P-8 is a surveillance aircraft used by the U.S. Navy, which in recent years has solicited proposals to provide maintenance and system upgrades on the plane. Inside Defense magazine describes the plane as a “heavily militarized derivative of Boeing’s 737 airframe.”
Kubasik said the contracts L3 hopes to receive “would replace the P-3 work that finished a couple of years ago. So strategically I keep an eye on P-8. It’s a slow ramp, but it will give us the base that is so important in these capital-intense facilities.”
He is most excited about the potential of receiving a contract to provide avionics upgrades on C-130 aircraft, Kubasik said.
“There (are) three or four competitors, you can probably guess who they are, and we have invested in some avionics packages that are flying quite well on the C-130s,” he told investment advisers on the call.
Programs to provide continuous upgrades to the cockpit and the avionics capabilities of C-130 transport planes date back nearly two decades, according to various reports.
“And the big cockpit upgrade is in our sweet spot, and the proposal is in,” Kubasik said. “We’ll know more in the fourth quarter, and I am sure we’ll go through the normal key-in process. And then we have a classified program that’s pretty exciting. So, I feel like we have opportunities in Waco.”
L3 enjoyed sales of $9.5 billion during fiscal 2017, a 4 percent increase from the previous year, and saw its earnings for the quarter hit $3.34 per share, up from $2.32 per share during the fourth quarter the previous year. The company received an $80 million benefit from the tax cut recently signed into law by President Trump, Kubasik said.
Lance Martin, local spokesman for L3 Technologies, did not return calls seeking comment.