BAE Shutters Texas Factory, JLTV Production Moved

Moving JLTV: Lockheed Martin will shift production of the JLTV to its Camden, Ark., facility after BAE Systems announced it would close its facility in Sealy, Texas. 

WASHINGTON — In a surprise announcement with serious implications for the US Army’s ground vehicle industrial base, BAE Systems announced today that it is shuttering its Sealy, Texas, production facility by the end of June 2014.

A total of 325 employees will be put out of work between November and June, and some of the work being done at the facility will be moved to other BAE facilities, a spokesperson for the company said.

The facility at Sealy was focused on wheeled vehicle production. With orders having dried up for mine-resistant ambush-protected vehicles and the family of medium tactical vehicles, and no new orders coming in, the company said it didn’t have enough work to keep the line open.

“We explored every possible option to maintain the viability of the facility, but the decline in US defense spending has made it necessary for us to continue rationalizing our business base,” said Erwin Bieber, president of BAE Systems Land & Armaments sector, in a statement. “This was a difficult decision, but it in no way reflects upon the hard work and commitment of the employees. We will do all we can to assist them during this difficult transition.”

The move has implications beyond BAE Systems. The company had an agreement with Lockheed Martin to manufacture Lockheed’s Joint Light Tactical Vehicle (JLTV) at Sealy, but the company said that it will still provide the armored cabs, protection solutions and manufacturing expertise.

Lockheed said today that it is moving production of the JLTV to the company’s Camden, Ark., manufacturing facility.

Kathryn Hasse, director – JLTV at Lockheed Martin Missiles and Fire Control, said on a conference call Monday afternoon that “BAE remains a key partner with us on our JLTV team,” but with the shift in production locations, “the terms and conditions of the agreement will be modified” between the two companies.

Hasse wouldn’t elaborate on those new conditions might be, but said it is almost certain that some engineers who had worked for BAE at Sealy would come aboard at Lockheed and move to the Arkansas plant.

She also said that since production is moving to a new facility, the company will have to invest to make some modifications to the new plant in order to accommodate JLTV production. But given that the next milestone in the program won’t come until 2015, the work would be done well before then.

Lockheed is also claiming that the shift to a Lockheed facility will allow the company to reduce overall production costs from the program, but when asked why they didn’t make the move earlier in order to reduce costs, Hasse said that it was due to the teaming agreement with BAE.

In August, 22 JLTV prototypes left the Sealy line en route to the Army as part of the program’s Technology Development and Engineering and Manufacturing Development phases.

“BAE Systems remains committed to Lockheed Martin and our JLTV program,” Mark Signorelli, vice president and general manager of Combat Vehicles for BAE Systems said in a statement.

Lockheed Martin’s Camden line has already produced gear such as the High Mobility Artillery Rocket System launchers, Patriot Advanced Capability-3 missiles and Terminal High Altitude Area Defense ground vehicles.

BAE executives have been warning of layoffs for some time. During a tour of the company’s experimentation facility in Michigan in September, Signorelli expressed concern about the company’s manufacturing facility in York, Pa., as well. While the company has reached deals with the Army to keep the production line there humming through 2014, the work will run out about halfway through 2015.

“We mitigated the major risks in ‘14,” he said, but “we still can’t support the entire supply base. There will be layoffs.”