A historic Akron industrial facility with ties to wartime production, aerospace simulators, space exploration and military mission systems will close by 2015.
Lockheed Martin Corp., which took over operations in the city that date to Goodyear Aircraft decades ago, announced plans Thursday to shutter the facility along with four other operations around the country.
One footnote in the announcement widely called “sad news” for Akron was that some work will be continued at the landmark Airdock. The Lockheed Martin operation is spread over buildings nearby.
About 4,000 workers nationwide, including about 500 people in Akron, are expected to lose their jobs starting next year and into 2015, Lockheed Martin said.
Employees and local public officials reacted with sadness and anger, saying the loss of high-paying jobs will be an economic blow to the region. Some, including the property owner, held out hope that new tenants will quickly be found to fill the sizeable property next to Akron Fulton International Airport once Lockheed Martin moves out.
Akron Mayor Don Plusquellic said in a news conference there are businesses that are “beating down our door” and interested in locating here but have been unable to because of a lack of existing manufacturing space. The site will be put to use once Lockheed Martin moves out, he said.
“I know it does not give comfort to the 500 families affected or the loss of wealth, but it does mean that we can still operate out of the site and fill it with other companies and employees,” Plusquellic said.
Lockheed Martin, headquartered in Bethesda, Md., said it is making the moves “to increase the efficiency of its operations and improve the affordability of its products and services” in the face of “continued declines in U.S. government spending.” About 82 percent of the defense giant’s 2012 revenue of $47.2 billion came from the federal government.
By mid-2015, Lockheed plans to close operations in Akron; Newtown, Pa.; Goodyear, Ariz.; Horizon City, Texas; and four buildings on its Sunnyvale, Calif., campus.
“With the exception of the Akron Airdock, operations in Akron are planned to close by early 2015,” Lockheed Martin said in a statement.
Work possibly will be moved to Owego, N.Y., and Orlando, Fla. The plans are expected to be finalized early next year.
The company said about 500 of its 600 workers in Akron will be impacted. It said the Akron closure “is expected to save millions annually and reduce the company’s footprint by 677,000 square feet.”
Plusquellic said the Lockheed Martin shutdown will cost the city more than $1 million a year in lost income tax revenue.
He said he had “zero” warning about Thursday’s announcement even though he had met with union officials at Lockheed Martin on Wednesday. Hourly workers at the Akron facility are represented by United Auto Workers Local 856.
Plusquellic blasted the political group called the Tea Party and blamed the closing on what is happening in Washington, D.C., and Congress’ inability to pass a budget.
“Tea Party folks who are irresponsible ... who stand up and give speeches and filibuster in Congress. ... Somehow they don’t realize there are real consequences,” Plusquellic said. “The consequences unfortunately are over 500 people who have been hard working” will lose their jobs, he said.
The Akron plant was “a profit center” and was making money and “was the most competitive of the Lockheed Martin facilities” when it came to bidding for government contracts, Plusquellic said.
Plusquellic said he spoke to a vice president of Lockheed Martin and gave him “an earful” after Thursday’s announcement was made and said he would do whatever it takes and “everything I can do to protect the citizens of Akron.”
He said he told the vice president that there was a 700-page contract with the county that provided funding for $1.3 million in improvements to the Airdock and that local officials are now reviewing the document to determine if contract language was violated.
“We need the jobs here,” said Plusquellic.
Bob Bowman, Akron’s deputy mayor for economic development, said the shutdown will be a significant blow.
While city officials don’t know the “mix of job classifications” at the facility, “clearly any of the jobs out there are higher paying, higher skilled jobs than the norm,” Bowman said.
Even if Akron could immediately attract 600 new jobs, those jobs would not soon create the kind of wealth Lockheed did with its veteran, skilled employees at the higher end of the pay scale.
The economic impact will spread to suppliers, presumably including area tool and die-making businesses and metal fabricators, Bowman said.
“We don’t know all the subcontractors” working with the facility, he said. “They’re a big dog in the region.”
The Akron campus is part of Lockheed Martin’s Mission Systems and Training division which provides flight simulators, missile defense systems, radar systems and more. The division’s income fell $180 million to $1.68 billion from Jan. 1 through the end of September compared to $1.86 billion for the same nine-month period a year ago.
Employees coming and going from the Akron plant before noon Thursday said they were not surprised to learn of the shutdown.
“We were kind of expecting it for a couple of weeks ... we knew something was coming,” said Marshall Miller, 23, a software engineer who was hired earlier this year.
He was referring to news reports earlier this month that the company had developed contingency business plans that included closing the Akron plant and moving hundreds of jobs elsewhere.
When news of the plan was first reported in Syracuse, N.Y., Lockheed said at the time that “no decisions have been taken” regarding any closures.
“It’s kind of tough,” said Miller, a graduate of the University of Kentucky who moved from his home state of Kentucky to take the job. “I’ve been here for six months now ... I’ve developed a lot of friendships.”
Miller noted he’d begun attending an Akron church and wants to stay in the area.
Another engineer, who declined to give his name, was leaving the plant to interview for a job at another company.
The engineer said he had worked at Lockheed in Akron for seven years and the company, over the past couple of years, did not appear to be going after much new business for the Akron complex.
The engineer said he is confident he’d find other work in the area. “I’ve worked at other places where I’ve been laid off,” he said. “This is business. I don’t have any hard feelings.”
Jim Mercer, chairman of the bargaining committee for the Lockheed section of UAW Local 856, said executives told union and salaried workers of the closing in a large meeting that began at 8:30 a.m.
Mercer, a 30-year employee who works in shipping and receiving, said members had been talking about the possibility of a shutdown for the past couple of weeks.
The news reports started with a story in the Post-Standard of Syracuse that Lockheed Martin developed, and then postponed, plans to close facilities in central New York and elsewhere, including Akron. The newspaper cited confidential sources, reporting that the plans were part of a consolidation strategy.
“When the story first came out two weeks ago, the rumor mill started,” Mercer said. “Now the rumor mill is over and we know which way the company is going.”
Mercer said he doesn’t know how many union members will be affected. Members include machinists, welders, assembly workers and shipping and receiving personnel.
“Right now we’re still collecting information from the company on how this shutdown is going to affect the bargaining unit,” Mercer said. “We’re just in the planning phases on what is going to transpire and how they are going to close it down.”
The union, he said, would negotiate “plant closure language,” and try to “get the best deal possible” for members.
Company officials, Mercer said, told employees in the meeting that it was a partial shutdown and that it would take until mid-2015 to “completely shut down” the parts of the facility that will be closed.
“Lockheed Martin will still be here in Akron, Ohio,” Mercer said, “but it won’t be as big as it is now. Some parts will remain.”
Mercer said he believes the shutdown plans are the result of a realization that the company had gotten too large after buying up various aerospace companies. In 1994, the company was formed by the $10 billion merger of Lockheed Corp. with another defense contractor, Martin Marietta.
“Lockheed Martin is too big,” Mercer said, “and they finally figured it out.”
He noted that in the 1990s, the company seemingly “bought up every aerospace company in the world.”
Lockheed’s purchases included buying the Akron facility in 1996 from Loral Corp. of New York.
Loral had acquired the facility as part of its purchase for $588 million paid to Goodyear Tire & Rubber Co. for Goodyear Aerospace Corp. in 1987.
In 1989, Loral sold off the Aircraft Braking Systems portion of the former Goodyear Aerospace. The aircraft braking business is adjacent to Lockheed’s Akron facility and is now owned by the British company Meggitt plc.
Lockheed Martin sold its Akron campus in 2005 to California development company Industrial Realty Group, which owns numerous properties in Northeast Ohio. Lockheed then leased back the property from IRG.
The closure announcement also came as a surprise to the head and founder of IRG, Stuart Lichter.
Lockheed Martin likely has several years left on its Akron lease with IRG, Lichter said. The impending vacancy by Lockheed Martin should not hurt his company financially, he said.
“You are never happy to lose a company like Lockheed Martin, for ourselves as an investor or the city,” Lichter said. “They have a lot of high paying jobs there. ... We’re still concerned about the jobs in the city. Whether it affects us or not isn’t the issue. Affecting the economy in the city is a concern.”
Lichter said he and others heard in the past couple of weeks that Lockheed Martin had been investigating closing operations in Akron and elsewhere. “Certainly we weren’t tipped off months ago,” he said.
“The flip side of it is ... there is a shortage of these kinds of facilities in the Akron area. That’s a kind of silver lining,” Lichter said. That means IRG has strong prospects to bring in a tenant or tenants to replace Lockheed Martin, he said.
Over the years IRG has had major tenants leave at other properties and was able to bring in successors, he said.
“Sometimes we end up far worse off and sometimes we end up far better,” Lichter said.
One of IRG’s other Akron projects is redeveloping the former Goodyear headquarters campus on East Market Street. Lichter has renamed the project the East End.
Among IRG’s other Ohio holdings are Canal Place in Akron and the former Hoover campus in North Canton. Canal Place is the former B.F. Goodrich factory complex downtown. Hoover was the site of decades of vacuum manufacturing operations.
The airdock, which has a decades-long history of involvement with Goodyear blimps and airships, is now owned by an entity called the Development Finance Authority of Summit County. That agency is an economic development arm of the county government. Lockheed signed a 20-year lease with the authority in early 2006. The company has used the cavernous facility for small tethered blimps called aerostats as well as for a high-tech, solar-powered blimp prototype called the High Altitude Airship that failed and crashed on its initial flight in July 2011.
The local government agreement requires the company to maintain the facility and monitor environmental issues there.
Authority President Chris Burnham on Thursday described the financial terms of the lease as “really nominal” and declined to provide a specific figure. He said the payments are nominal because of the cost of maintaining the facility.
Burnham estimated that Lockheed has spent about $30 million on improvements and environmental cleanup at the site.
“It’s a really unique building and it has some value to them,” he said.
One Pentagon official called the building “a national asset” during a visit, Burnham said.
Summit County Executive Russ Pry called the announcement “a sad day.”
“There are a lot of good people who have been over at that facility their whole careers who will be impacted by this,” Pry said.
Dan Colantone, president and chief executive officer of the Greater Akron Chamber spoke of “how sad we all are” at the news.
Beacon Journal staff writers Rick Armon, Jim Carney, Kathy Antoniotti and Dave Scott contributed to this report.