June 14, 2012 / 9:05 PM / in 5 years

Lockheed brings in more workers as strike drags on

WASHINGTON (Reuters) - Lockheed Martin Corp (LMT.N), under intense pressure by the Pentagon to reduce its labor and pension costs, said on Thursday it would hire more temporary workers to maintain production at its Fort Worth, Texas, plant, where a key union has been on strike for eight weeks, mainly over future pension benefits.

Lockheed spokesman Joe Stout said the company had hired almost 300 temporary workers already, and had borrowed about 50 non-union workers from other sites in Texas, Georgia, California and South Carolina for welding and other specific jobs.

He declined to say how many more temporary workers would be hired at the Fort Worth plant where Lockheed builds the F-35 fighter jet, noting that the company’s current plan was “to keep adding them as long as the strike continues.”

In addition, he said about 510 members, or about 14 percent, of the striking International Association of Machinists and Aerospace Workers (IAM) had returned to work at the Texas plant and two military bases in California and Maryland.

Lockheed Chief Executive Bob Stevens and other top officials thanked workers in the company’s aeronautics division in a letter on Wednesday for working long hours and taking on additional responsibilities to keep production running.

They said the company could not change its proposal to end defined pension benefits for future workers - the main issue dividing the two sides - given current economic and national security realities.

“Until an agreement is reached, we are compelled to pursue alternative measures to ensure we meet our commitments,” said a letter to employees signed by Stevens, President Christopher Kubasik and Larry Lawson, head of the aeronautics division.

“As you’ve seen, we’ve already brought on hundreds of temporary workers to supplement the great work you’re doing, and we’re accelerating the hiring of additional temporary workers to keep the business moving forward,” they said.

Lockheed remains mired in difficult negotiations with the Pentagon for a fifth batch of 32 F-35 fighter planes, talks in which pensions have become a key issue, according to a source familiar with the discussions.

The two sides remain far apart despite six months of talks, said the source, noting that U.S. defense officials have demanded “substantial” cuts in Lockheed’s labor and pension costs, which account for about a third of the company’s overall costs on the F-35 Joint Strike Fighter program.

“The government is seeking more savings in the labor costs and pensions than anywhere else,” said the source, who was not authorized to speak publicly. “That means the company really doesn’t have any choice in the strike, because the government is putting so much pressure on pension costs.”

Lockheed’s other unions and salaried workers agreed to defined contributions pension programs as early as 2006, but the Fort Worth machinists union has dug in its heels, arguing that future workers will need the defined benefits more than ever, given the overall level of economic uncertainty.

Stout said the temporary workers and about 1,100 salaried workers were working on manufacturing, assembly, flight operations support and maintenance.

Lockheed had many more employees available for assignment if needed, he said, noting that the company was conducting daily training classes to make sure workers had the required skills and processes.

Stout said the company was operating two shifts and working every day at the Fort Worth facility, where about 260 of the 3,300 striking machinists have returned to work.

Nearly all 150 union members have been working at Edwards Air Force Base in California despite the strike, and about 100 of 150 striking workers have crossed the picket line at Naval Air Station Patuxent River in southern Maryland, Stout said.

The union, which is paying workers about $150 in strike checks a week, said no negotiations were scheduled.

“Standing together, we can win,” the union said on a blog posting on the local union’s website, arguing that Lockheed could clearly trim overhead costs elsewhere since it was able to free up 1,700 or more salaried workers to help with production.

“Obviously the work they were doing wasn’t that important, that they can take two months off,” the union website said.

Stout said the company was making progress on production, and continued to meet its delivery commitments.

“The people working in the factory in those contingency jobs are getting more accustomed to what their tasks are,” he said. “We’ve gaining productivity every week as this continues.”

For now, he said the company still believed it could deliver all 30 F-35 fighter jets scheduled for delivery this year, although a reassessment might be needed later in the year if the strike continued much longer.

Reporting By Andrea Shalal-Esa; Editing by Phil Berlowitz

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