BAE Systems has begun massive layoffs in the wake of its loss of a lucrative contract with the U.S. Army last year.
In February, the U.S. Army affirmed the contract award to the Oshkosh Corporation, originally received on Aug. 26, 2009, to produce the Family of Medium Tactical Vehicles (FMTV). The bids of Oshkosh, BAE Systems and Navistar Defense for the FMTV program were re-evaluated by the U.S. Army in response to recommendations made by the Government Accountability Office (GAO) following a review of competitors’ protests of the original contract award to Oshkosh. Originally for 2,568 trucks worth about $280.9 million, the five-year contract will cover as many as 23,000 trucks and trailers and is worth $3 billion.
As a result of the contract loss, BAE Systems will slash its global tactical systems workforce in Texas and Michigan by almost half by year's end. As many 1,300 of 2,900 positions will be cut, with 97 percent of them in the Houston area, including the Sealy plant. The layoffs will begin in September with 600 temporary workers.
According to the Houston Chronicle, Dennis Morris, president of BAE's global tactical systems, said the cuts were necessary "for us to remain viable in a competitive and challenging environment. We deeply regret the impact this decision will have on our employees."
BAE is "actively pursuing" other manufacturing opportunities for the Sealy plant.