The L3 Technologies plant in Waco has laid off more than 60 people, a week after the New York-based defense contractor announced plans to merge with Florida-based Harris Corp. in a deal that would create a military technology powerhouse with a projected annual revenue of $16 billion.
L3 eliminated 62 positions, both hourly and salaried, as part of a cost-cutting and efficiency move in response to a shortage of work orders, L3 spokesman Lance Martin said Thursday. The layoffs are not related to the pending merger, he said.
“These were difficult but necessary steps to ensure that we are sized appropriately for the current backlog of work,” according to a statement from Martin. “This also makes us more competitive for future work we are actively pursuing with multiple customers which will further ensure the facility future viability.
“We do not take these decisions lightly, and we appreciate the contributions of our employees. We have worked closely with the affected employees to provide severance packages and outplacement assistance, including potential placement at other L3 facilities, where available.”
Martin said L3 now employs about 750 people in Waco. The facility at Texas State Technical College airport has seen employment plummet in recent years, with the number of staffers and contract employees declining from a peak of 1,500 to 1,800 people more than a decade ago. The plant, under L3, has specialized in modifying military and commercial aircraft and installing customized interiors on planes used by dignitaries and foreign heads of state.
It once was Waco’s largest industrial-related employer, but that distinction now belongs to the Sanderson Farms poultry processing plant.
Business slipped in recent years as defense-related spending waned due to sequestration. New L3 CEO Chris Kubasik came aboard pledging the company would take steps to create a place for itself in the higher-tech cutting-edge future of national defense. The Waco plant would rely less on contracts to maintain military aircraft.
Improving efficiency at the Waco facility until it can complete its mission of “returning to growth” necessitated the layoffs, Martin said in an interview.
The layoffs are not tied to the pending merger with Harris, which could be finalized next year, after regulatory approval, he said.
“We have no plans for additional reductions,” he said.
Announcement of the proposed merger followed L3’s organizational shakeup earlier this year that placed Waco operations in a newly formed Intelligence, Surveillance and Reconnaissance Systems unit with headquarters in Plano. That unit alone is projected to have 2018 sales of $4.7 billion and will support 18,000 employees in the U.S., Great Britain, Canada, Italy and Australia, according to information about the merger provided by L3.
According to a press release announcing the merger, the companies already are discussing “operating synergies” that would free up $3 billion by the end of the year and create the potential for $500 million in annual savings.
The newly created L3 Harris Technologies will be based in Melbourne, Florida. Its 12-member board will consist of six members from each company, according to the press release.
The L3 complex in Waco has gone through several ownership and management changes since Richardson-based Electrospace Systems Inc. built a hangar in 1984 as an overflow facility, according to an L3 history page. ESI was sold to the Chrysler Corp. in 1987, and the Waco operation became Chrysler Technologies Airborne Systems Inc. Defense giant Raytheon bought Chrysler’s defense assets in 1996, including the Waco facility.
Raytheon sold the facility to L-3 Communications in 2002. The company changed its name to L3 Technologies in 2016, and since earlier this year, the facility has been known as L3 ISR Systems Waco.