Aerojet Rocketdyne Restructures Unit, Opens Headquarters

Aerojet Rocketdyne Holdings, Inc.’s (NYSE:AJRD) subsidiary, Aerojet Rocketdyne is realigning its business units and is planning to set up the new Defense business headquarters in Huntsville, AL.

The initiative will see the company merging its six business units into two – Space and Defense. For now, the Space unit will report to Eileen Drake, Chief Executive Officer and President, while the Defense unit goes under Mark Tucker, Aerojet Rocketdyne Chief Operating Officer. Once the senior vice presidents of the units are finalized, both units will report to Drake.

Aerojet Rocketdyne expects the consolidation of its business units to result in savings of $8 million per annum. Management said that it has recognized almost $100 million in cost savings since its acquisition of Pratt & Whitney Rocketdyne in Jun 2013.

Last week, Aerojet Rocketdyne announced its plans to save up to $20 million a year by refinancing its debts. Moreover, a Competitive Improvement Program, launched in Mar 2015, is on track to ensure projected savings of $145 million per annum, beginning fiscal 2019.

Meanwhile, Aerojet Rockedtyne is establishing the Defense unit headquarters, along with the company’s Defense Advanced Programs, known as the Rocket Shop, in Huntsville. These moves are expected to provide easy access to major customers in the region including the U.S. Missile Defense Agency, the Army’s Redstone Arsenal, the NASA’s Marshall Space Flight Center, The Boeing Co. (NYSE:BA) , Lockheed Martin Corp. (NYSE:LMT) and Raytheon Company (NYSE:RTN) .

However, according to Glenn Mahone, Aerojet Rocketdyne’s spokesman, the Space unit is not going to have a specific head office. Instead, the unit will be supported by various Aerojet Rocketdyne sites across the country, depending on program needs and core competencies.

Mahone further said that there will be 40 new job vacancies at the company's existing location at 555 Discovery Drive, Huntsville.

On the other hand, Drake believes that reorganization is an essential step to improve efficiency and develop a competitive edge. He stated, “This move within our aerospace and defense reporting segment better aligns our business units with our operating capabilities and customers, increases accountability at the management level, and further streamlines our business operations by reducing spans and layers in the organization, while achieving significant cost savings for our customers and the country.”

Based in Sacramento, CA, Aerojet Rocketdyne focuses on developing military, civil and commercial systems and components for the aerospace and defense industry.

The company currently has a Zacks Rank #3 (Hold).

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