BAE Systems Plc said it may be forced to dismiss more than 3,500 employees in its U.S. shipbuilding business as Pentagon spending cuts threaten maintenance work on navy vessels.

Four locations and about 70 percent of U.S. staff involved in ship repair work may be affected, the London-based company said in an emailed statement. Facilities in Norfolk, Virginia and San Diego, California would be hit most severely, with cuts also possible in Hawaii and Mayport, Florida, BAE said.

The U.S. Navy has told BAE Systems that work on 13 ships may be affected as it scales back spending to bring activities in line with a reduced budget. The company said the risk of possible work cancellation prompted it to issue conditional worker adjustment and retraining notification notices required before laying off employees.

"We do not take these decisions lightly, and we regret the anxiety it causes our employees and their families," Bill Clifford, president of BAE Systems Ship Repair, said in a notice to employees that was obtained by Bloomberg. Suppliers could also be affected, BAE said.