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DEFENSE FIRMS FEELING THE PINCH

McDonnell Douglas Corp., facing serious technical problems on its military aircraft programs and financial difficulties on its commercial jetliner business, said Wednesday that it will attempt to cut $700 million from its annual operating costs -- a move that could lead to an estimated 10,000 additional layoffs.

The Boeing Co. said the Pentagon's cut in the B-2 Stealth bomber program has prompted it to begin sending layoff notices to up to 1,500 workers, or about 15 percent of its Stealth work force. The firm said actual layoffs probably would be only a few hundred because of attrition and reassignment of B-2 workers to other jobs within Boeing.

Also, Moody's Investor Services Inc. dropped its credit ratings two notches for General Dynamics Corp. because of the sagging conditions in the defense industry.

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