A 1/6 scale model of the AR1 engine currently in development by Aerojet Rocketdyne as a replacement for the Russian-built RD-180 engine that powers United Launch Alliance's Atlas 5 rocket. Credit: Aerojet Rocketdyne

Story was updated at 2:44 p.m. with additional details.

WASHINGTON — Aerojet Rocketdyne announced June 27  that it expects to save $8 million annually by consolidating its six business units into two: Space and Defense.

Both units will report to Aerojet Rocketdyne CEO Eileen Drake once senior vice presidents have been named. Until that happens, the Space unit will report to Drake and the Defense unit will report to Aerojet Rocketdyne Chief Operating Officer Mark Tucker.

Spokesman Glenn Mahone said approximately $8 million in annual savings would be achieved by “flatten[ing] the layers of top level management.” Mahone said approximately 10 “senior-level people” could be laid off as a result of the consolidation.

At time of publication, neither California, Alabama, Florida, Virginia nor Washington — all states with a significant Aerojet Rocketdyne presence — had posted layoff notices from the company.

The reorganization follows news that Aerojet Rocketdyne is relocating its headquarters from Sacramento to El Segundo, California, in order to be closer to the company’s Los Angeles area customers. The company employed 4,800 people nationwide at the end of 2015.

Aerojet Rocketdyne also announced last week that it plans to save up to $20 million a year by refinancing its debt. The company said it was taking advantage of “robust debt market conditions” to refinance its debt with a new credit facility and will have to pay an unspecified one-time charge associated with the write-off of earlier refinancing fees.

In a June 27 press release announcing the consolidation, Aerojet Rocketdyne said it has realized nearly $100 million in cost savings since Aerojet acquired Pratt & Whitney Rocketdyne in June 2013.

Aerojet Rockedtyne said it is locating its newly formed Defense Business Unit headquarters in Huntsville, Alabama, giving it easy access to major customers there including the U.S. Missile Defense Agency, the Army’s Redstone Arsenal, NASA’s Marshall Space Flight Center, Boeing, Lockheed Martin, and Raytheon. Mahone told the Huntsville Times that Aerojet Rocketdyne anticipates adding about 40 positions in Huntsville.

U.S. Sen. Richard Shelby (R-Ala.) welcomed the news.“North Alabama plays a leading role in supporting our nation’s space and defense needs, which makes Aerojet Rocketdyne a natural fit for the area,” Shelby said in a statement.  “I am confident that Aerojet Rocketdyne will build on its history of producing cutting-edge rocket technology and continue to flourish in the state of Alabama.”

.@AerojetRdyne‘s announcement today is great news for Alabama. Read my full statement here: https://t.co/MoabSZ3DSU

— Richard Shelby (@SenShelby) June 27, 2016

Mahone said the reorganization does not include establishing a new headquarters for the Space business unit. Instead, he said, the company will continue operating its space businesses from their existing locations, including campuses in Sacramento and  Canoga Park, California,  West Palm Beach, Florida, and Redmond, Washington.

“Today’s reorganization is another crucial step in our strategic journey to enhance the efficiency of Aerojet Rocketdyne and improve the company’s competitive posture,”  Drake said in a statement. “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.”

Prior to the announcement, Aerojet Rocketdyne was organized into six business units:

  • Tactical Systems: includes propulsion and warhead systems for tactical missiles.
  • Missile Defense and Strategic Systems: includes liquid and solid divert and attitude control propulsion systems and booster motors for missile defense applications.
  • Defense Advanced Programs: includes hypersonic propulsion work.
  • Space Launch Systems: includes production of liquid propellant rocket engines and solid rocket motors.
  • Space Advanced Programs: includes the AR-1 advanced hydrocarbon engine development and green propulsion projects.
  • Space Systems: includes thrusters and other in-space propulsion systems for satellites and launch vehicles.

Brian Berger is editor in chief of SpaceNews.com and the SpaceNews magazine. He joined SpaceNews.com in 1998, spending his first decade with the publication covering NASA. His reporting on the 2003 Space Shuttle Columbia accident was...