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BAE Systems’ Sealy Plant Closure Causes JLTV Ripples

The Oct. 15, 2013 announcement that BAE Systems would be closing its vehicle production facility in Sealy, Texas, is causing ripples through one element of the Joint Light Tactical Vehicle (JLTV) community.

The announcement itself, which indicated that the Sealy facility will be shut down by the end of June 2014, reflects a continuation of a downsizing trend that has been under way for several years at that location.

The Sealy plant was the original production site for the Family of Medium Tactical Vehicles (FMTV), and BAE Systems acquired that military production business through its purchase of Armor Holdings, Inc., in 2007 (Armor Holdings had previously acquired Stewart & Stevenson in 2006). A significant employee layoff process actually began at the facility in 2010, when the FMTV program “re-buy” was awarded to Oshkosh Defense, an award subsequently upheld by the Government Accountability Office.

“This plan is proceeding with the full support of BAE Systems,” said Kathryn Hasse, director of the JLTV program at Lockheed Martin Missiles & Fire Control. “BAE Systems continues to remain a key partner with us on our JLTV team.”

In September of this year, BAE Systems announced that it was cutting another 140 positions due to a decrease in U.S. defense spending, continuing a reduction of approximately 1,000 positions over the past two years. The September reduction announcement left an estimated 198 employees in Sealy who would continue manufacturing work on the Joint Light Tactical Vehicle (JLTV) project, where BAE Systems plays a vital role on the Lockheed Martin team.

LMCO JLTV course

One of the Lockheed Martin-led teams JLTV examples on a test course. Lockheed Martin photo

Both the technology development (TD) and engineering and manufacturing development (EMD) vehicles were built on the line in Sealy. Moreover, the JLTV teaming agreement with Lockheed Martin had reportedly allocated “final assembly work share” to BAE Systems, with BAE Systems choosing at the time to do that JLTV vehicle assembly in their Sealy plant.

Within hours of the BAE Systems plant closure announcement Lockheed Martin representatives announced that they would be moving their hoped-for JLTV production activities to their plant in Camden, Ark.

“We are off and executing. We fully expect that we will have no difficulty meeting the customer’s production schedule for the JLTV production program and we are delighted that BAE remains a key member of the team providing what is really some discriminating aspects of our solution,” she noted.

“This plan is proceeding with the full support of BAE Systems,” said Kathryn Hasse, director of the JLTV program at Lockheed Martin Missiles & Fire Control. “BAE Systems continues to remain a key partner with us on our JLTV team. BAE will continue to play a vital role. They will continue to provide the JLTV armored cab, armor and protection systems…[that have] really proven to be exceptionally effective in government testing. They are also going to continue to provide to us their military vehicle expertise and will provide to us their vehicle production expertise.”

Hasse noted that Lockheed Martin had begun planning for contingency action on a production facility move “earlier this year” in the event that the closure decision by BAE Systems “were to occur.”

“This decision on BAE’s part, which we were sorry to hear, did afford the team a great opportunity to initiate a low-risk affordability initiative,” she added. “As everyone is aware, the government has an affordability target in mind for the JLTV ‘base vehicle’ and we fundamentally believe that by moving the production to the Lockheed [Martin] facility in Camden that we are going to have significant cost reductions and production efficiencies that will end up yielding, frankly, the customer significant benefits from a cost perspective.”

JLTV variants

JLTV variants during testing. The BAE Systems Sealy plant closure will mean some components of the vehicles will now be built in the Lockheed Martin plant in Camden, Ark. Lockheed Martin photo

Reiterating that the team’s TD and EMD vehicles had been built in Sealy, she explained, “As we go forward, we are going to take those manufacturing processes and that tooling; we are evaluating them and looking at ways that we can further simplify the processes; and we will pick them up and move them north roughly 500 miles. We will then take those and further optimize them for the full rate production.”

“Our expectation is that the teaming agreement will remain in place, but clearly the terms and conditions will be modified as we go forward. And that is something that we will be discussing with BAE.”

“We are off and executing. We fully expect that we will have no difficulty meeting the customer’s production schedule for the JLTV production program and we are delighted that BAE remains a key member of the team providing what is really some discriminating aspects of our solution,” she noted.

Specific impacts of the plant closure on the teaming agreement and work share breakdown remain to be determined, with Hasse acknowledging, “Our expectation is that the teaming agreement will remain in place, but clearly the terms and conditions will be modified as we go forward. And that is something that we will be discussing with BAE.”

“We expect a contract award sometime in the summer of 2015, with the first [production] vehicles to be due roughly 10 months or so after contract award,” she said. “So if that schedule holds we will be delivering vehicles sometime early in 2016. And frankly we don’t anticipate any difficulties whatsoever in delivering the same high quality, high performing vehicles to the government out of Camden that we provided to them out of the Sealy facility.”

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Scott Gourley is a former U.S. Army officer and the author of more than 1,500...