Aerojet Rocketdyne [AJRD] on Monday announced a new round of facilities consolidation and optimization that is expected to result in $85 million in annual savings.
The first phase of the company’s two-year-old Competitive Improvement Program (CIP) is expected to save the company $145 million annually, and adding the second phase will bring those savings to $230 million, Aerojet Rocketdyne said. Phase one is expected to be completed in 2019 and phase two in 2021.
The total one-time costs for the CIP are pegged at $235.1 million. The phase one costs through last December were $47.3 million and the company said another $65.7 million are expected. The projected phase two costs are put at $122.1 million.
“We are two years into the first phase of our CIP affordability drive and the consolidation process, and overhead cost reductions achieved to date have exceeded our expectations,” Eileen Drake, president and CEO of Aerojet Rocketdyne, said in a statement. “We intend to build on this success by expanding our CIP-related consolidation efforts so we can deliver the value our customers demand and position the company for future growth.” She also said the affordability initiative is essential for the company’s performance and future growth.
The consolidation plans include moving defense-related program management, engineering and related support positions from the company’s Sacramento, Calif., site to its Defense headquarters and Rocket Shop Defense Advanced Programs in Huntsville, Ala., by the end of 2018. Most of the remaining programs and support positions in Sacramento will be relocated to the company’s Space headquarters at its Los Angeles site.
The site in Sacramento will go from the current 1,400 positions to around 290 and will become the Shared Services Center of Excellence.
Aerojet Rocketdyne plans to close down its Gainesville, Va., site in the third quarter of 2018 and relocate or eliminate 170 positions with relocations planned for Huntsville or its site in Orange County, Va. Overall the company expects to add about 800 jobs to Huntsville.
The company said that centralizing and expanding its existing presence in Huntsville will include a new state-of-the-art manufacturing facility for AR1 engine production, additive manufacturing, composites production, and research and development ready in mid-2019.