Martin lands $155 million GE pact Costs, price cut on thrust reversers

September 03, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

It didn't come easily, but the local Martin Marietta Corp. division has landed a $155 million General Electric contract to built thrust reversers for commercial jetliners.

Yesterday's award came as the result of a major reorganization of the Aero & Naval Systems unit that was designed to boost the division's competitiveness and position the company for aircraft work in the years ahead by cutting production costs 25 percent.

GE laid down the challenge back in June, Joseph D. Antinucci, president of the local division, said in an interview at his office.

"GE went to all of their suppliers and indicated certain thresholds that had to be met if they wanted to stay in the business," he said. "In our case, they asked for a [price] reduction of 25 percent. We got taken back a bit by that number, but in the final analysis that was the number we had to meet."

Mr. Antinucci noted that Martin Marietta has built more than 3,000 thrust reversers -- equipment that acts like brakes by reversing the direction of a jet engine's airflow -- since 1969. "They knew we could build a good product," he said, "but they didn't like our price."

Getting the price down took contributions from everyone in the division, which comprises operations in Middle River and Glen Burnie.

Production workers covered by union contracts voted to give up quarterly cost-of-living raises over the next four years. The company estimates this will save $1.3 million.

Another $2.5 million in savings will come from the salaried ranks in the form of reduced annual merit raises.

Mr. Antinucci said the latest changes come on the heels of $20 million the company has spent on capital improvements since 1989.

Other steps included dividing the local division into two parts: commercial business and a government contracts unit. The separation, he said, makes the commercial side more responsive to business opportunities.

Further, the layers of management have been virtually halved and 150 white-collar positions -- about 5 percent of the total work force of about 2,750 -- is being eliminated. Administrative functions of various departments were merged. Building space in Glen Burnie was consolidated.

Overall, there were 36 cost-cutting initiatives, company spokesman Buzz Bartlett said. "The majority of them saved $1 million, or more," he said.

Mr. Antinucci said the moves not only landed the GE contract for the production of another 1,300 reversers over the next four years, but positioned the company for other aircraft work.

He said the Baltimore County complex has teamed with Alenia, an Italian aerospace company based in Rome, and is bidding on a contract from Gulfstream Aerospace Corp. for construction of wing parts and other components for Gulfstream's new line of business jets.

He said the contract, which is expected to be awarded early next year, could be worth $600 million.

There is a risk in what the division is trying to do and Mr. Antinucci is the first to admit it.

The commercial side of the business accounts for about 40 percent of the division's $400 million in annual sales. He wants it to reach about 75 percent over the next five years to form business base he feels is broad enough to keep costs under control.

His concern is that the loss of a substantial contract on the commercial side could cause costs to skyrocket on the government side. Mr. Antinucci said the cost of government work, including the production of shipboard missile launching systems, could increase 15 percent to 20 percent, making the company less competitive in vying for military contracts.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.