The U.S. subsidiary of BAE Systems Plc plans to close a military vehicle plant in Texas next year and lay off about 325 employees, the company announced.
The facility, located about 50 miles outside Houston in Sealy, since 1990 has produced tactical wheeled vehicles for the U.S. military, including blast-resistant trucks known as Mine Resistant Ambush Protected vehicles, or MRAPs, for the wars in Iraq and Afghanistan, and the Humvee replacement Joint Light Tactical Vehicle, or JLTV.
The London-based company said industry contraction drove the decision to shutter the site by June 2014.
“We explored every possible option to maintain the viability of the facility, but the decline in U.S. defense spending has made it necessary for us to continue rationalizing our business base," Erwin Bieber, president of the company's land and armaments unit, said in a statement yesterday.
The layoffs will take effect between November and June.
"This was a difficult decision, but it in no way reflects upon the hard work and commitment of the employees," Bieber added. "We will do all we can to assist them during this difficult transition.”
The Defense Department faces $500 billion in automatic cuts over the next decade. That's in addition to almost $500 billion in defense reductions already included in 2011 deficit-reduction legislation. The first installment of the automatic cuts totaled $37 billion and began March 1 after lawmakers were unable to reach an alternative agreement on taxes and spending. The next round totals $52 billion and is set to take effect Jan. 1.
BAE is a subcontractor to Bethesda, Md.-based Lockheed Martin Corp. on the JLTV program, an effort to build a new light-duty truck to replace a portion of the Army's and Marine Corps' Humvee fleets. Lockheed in a separate statement said it will move production of the vehicles from Sealy to its own facility in Camden, Ark.
In addition to armored cabs for and prototypes of the JLTV, BAE's Sealy plant made trucks for U.S. and foreign missile platforms, turrets and systems for various vehicles, construction cabs and spare parts for medium-duty cargo trucks and MRAPs, the company said. It also produced enclosures for commercial oil and gas platforms, it said.
Work related to continuing business will be transferred to other unspecified sites, the company said.