Maryland's Top Defense Contractors

November 29, 1992

Maryland-based Martin Marietta moves to the top of its industry with its $3.01 billion purchase of General Electric's Aerospace Division. It's the mega-deal of a post-Cold War era in which declining Pentagon budgets will force consolidations, downsizing or close-outs on every defense contractor. For M-M workers at Bethesda headquarters, the main research and development laboratory at Relay and the Aero & Naval Systems facility at Middle River, this joining of two of the strongest players in the field is a bright spot in a cloudy landscape.

As Martin Marietta concentrates on its core military mission, the Westinghouse Electronic Systems Group in Linthicum finds itself a better position to diversify into civilian fields. For what reflected badly on Westinghouse's top management -- the forced shedding of its money-losing financial service units and four fringe enterprises -- enhances the importance of the Maryland operation.

The contrasts are many between Martin Marietta and Westinghouse. In the very nature of its business, Martin Marietta is bound to compete fiercely for healthy slices of a shrinking Pentagon pie. By consolidating with GE's Aerospace Division, it is positioned to be a prime contractor in major defense and space systems. Its Titan rockets, for example, can lift GE's communications satellites into space. Its battlefield missile systems marry well with GE radars. CEO's Norman Augustine of Martin Marietta and Jack Welch of GE describe their history-making deal as a "strategic fit." Their products are not competitive but complementary.

For Westinghouse chairman Paul Lego, his latest moves are hardly complimentary. While Martin Marietta and especially GE rode out the turbulent '80s in grand style by sticking to businesses they know, Westinghouse was sucked into the land acquisition and financial services frenzy that turned sour. By dumping these hemorrhaging divisions, the corporation is conceding its blunders and trying to save the money-making units in its network. The Linthicum operation, which has suffered heavy job losses, could be one of the firm's strong assets as it combines defense-related products with civilian fields as diversified as mail sorting and transit vehicle tracking.

Maryland ranks No. 5 in defense contracts. It has to protect itselduring the downsizing of the Pentagon budget. More is to come as President-elect Clinton adds to the cuts already under way.

Conversion to civilian work, Westinghouse-style, is one response. Keeping a hefty share of what will still be a $100 billion a year Pentagon procurement program is the Martin Marietta answer. Marylanders have to hope both approaches succeed. This will depend on good management, state-of-the-art worker skills and adroit assistance from the state and local governments.

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