Defense firm in Fridley lays off 314 workers

Employees at BAE Systems in Fridley got word Monday that 314 of them will lose their jobs because of the cancellation of U.S. Army contracts.

Nearly one in four employees will be laid off from the workforce of 1,319 people.

"These layoffs come as a result of the partial termination notice and stop-work orders the company received for its Future Combat Systems (FCS) manned ground vehicle program contracts," BAE spokeswoman Kelly Golden said Monday.

In recent years, BAE was among the defense contractors working on the next generation of combat equipment, and BAE employees were charged with the development of an artillery platform.

But the Pentagon recently directed the U.S. Army to restructure the FCS program. The Fridley facility was affected by an Army stop-work order for a "non-line-of-sight cannon," which a BAE official in 2006 said would provide soldiers with "an even more lethal, flexible and responsive fire support option." The firing platform featured a fully automated 155-millimeter howitzer.

However, President Obama, Defense Secretary Robert Gates and the Congress are conducting a broad review of defense spending priorities.

While BAE employees were absorbing the sobering news of the layoffs, President Obama was advocating the need to scrap costly programs that don't meet the needs of today's military. "Our troops and our taxpayers deserve better," Obama told the Veterans of Foreign Wars national convention.

In a later speech at the Army War College, Gates said that he wanted to reevaluate needs and then "re-launch a new Army vehicle modernization program." He said he has analyzed combat experiences since the 2001 terrorist attacks because of the importance of effectively outfitting ground forces who are vulnerable to "increasingly lethal forms of ambush."

The layoffs at BAE come just a few days before the Minnesota Department of Employment and Economic Development will report the July unemployment rate in Minnesota. In June, Minnesota's unemployment rate rose to 8.4 percent. The BAE cuts are among the largest workforce reductions in Minnesota in recent weeks. News of pending layoffs at BAE was first reported Saturday.

BAE's Golden said Monday that her company regretted the "involuntary" job cuts in Fridley. But, she said, "Given circumstances beyond our control, we are left with no other choice." The Fridley facility, located in an industrial area along East River Road, is part of the global BAE Systems, a defense and aerospace company based in England with sales of $34.4 billion in 2008.

"The company will continue to aggressively pursue future opportunities in order to maintain market share," Golden said.

Boeing Co. is the lead contractor for the FCS program, and about $3.6 billion was dedicated to that program in fiscal 2009, which ends in September, said Boeing spokesman Matthew Billingsley.

About 100 layoff notices have been issued by Boeing. However, he said many of the other Boeing employees affected by the FCS funding reduction will be "redeployed onto other defense projects" at Boeing. The bulk of Boeing's FCS layoffs have been in the Huntington Beach area of California.

Boeing has been using numerous subcontractors, including BAE Systems, on the FCS program. Boeing workers have been focused on program management, systems integration and software development.