General Dynamics ( GD) said a deteriorating backlog of aircraft orders has forced the company to cut jobs and reduce its guidance for the full year, while fellow defense contractor Northrop Grumman ( NOC) said it will also eliminate positions as it consolidates two of its units.

Falls Church, Va.-based General Dynamics said it will cut 1,200 jobs as it attempts to stabilize its backlog of aircraft orders and level load production over the next two years. The layoffs included 550 contractor personnel.


General Dynamics said that continued weak demand has forced Gulfstream Aerospace to cut large-cabin production and green-aircraft deliveries to a projected rate of 73 in 2009, down from 94. Gulfstream also said it will decrease production of its midsized aircraft from a projected rate of 30 to 24 this year.

As a result of the actions, General Dynamics lowered its guidance for 2009 to a range of $6 to $6.10 a share from the previous range of $6.70 to $6.75 a share. Analysts, on average, expect the company to notch an annual profit of $6.75, according to Thomson Reuters.

Northrop Grumman, meanwhile, said it will cut 750 workers, most of them in Southern California, as the Los Angeles-based company consolidates administrative staffs in El Segundo and Redondo Beach, according to several reports.

A Northrop spokesman told The Los Angeles Times that the company still has more than 850 open positions for skilled, technical jobs in engineering and manufacturing, indicating that the company's workforce in the region could actually grow in 2009.

Shares of General Dynamics were down 7.1% to $37.35, and Northrop Grumman's stock lost 3.6% to $35.03. Lockheed Martin ( LMT) and Boeing ( BA) also fell.