Billion-dollar pact for thrust reversers rejected by Martin Pratt & Whitney's terms unacceptable

January 30, 1993|By Ted Shelsby | Ted Shelsby,Staff Writer

A billion-dollar-plus contract that the people at Martin Marietta Corp.'s Middle River division thought they had in their back pocket has slipped away.

Martin said yesterday that it was unable to reach a final agreement with Pratt & Whitney on a contract for jet engine thrust reversers that Martin had said earlier was to have "a positive and very big impact" on its Middle River operations.

Pratt & Whitney wanted Martin "to take risks that we judged to be outside the limits of good business practice," Joseph D. Antinucci, president of Martin's Aero & Naval Systems division, said in a statement late yesterday. Company officials declined to elaborate on the statement.

Mr. Antinucci said accepting the contract on Pratt & Whitney's terms "would have put our company at long-term risk. With companies all around us failing, we have chosen not to expand our business with Pratt & Whitney on this project by entering into a contract we believe has a high potential for failure."

Mark Sullivan, a spokesman for Pratt & Whitney, a subsidiary of United Technologies Corp., offered some insight into the problem.

He said there was "a contingency liability issue" that would have had Martin assuming the additional costs if there were delays in Martin's ability to obtain the equipment needed to build the reversers from Rohr Industries Inc., which had been building the reversers. There was no guarantee of an immediate shift of the equipment.

Mr. Sullivan noted that Rohr had been building thrust reversers for Pratt & Whitney for many years. He said his company was still negotiating with Rohr to take over the work, but it was his understanding that no accord had been reached.

Instead of hiring additional workers, which had been expected as part of the new contract, Martin indicated yesterday that there was at least a chance it might have to lay off some people.

"We have been holding on to some employees in anticipation of this work," Mr. Antinucci said in the statement. "To the extent possible, we will immediately begin looking for work for these people on other programs and handle any reductions that may be necessary through attrition."

The company said it did not know the exact number of workers that might be affected, but estimated that it would likely be no more than 25 to 30 people.

Mr. Antinucci announced the agreement with Pratt & Whitney in early December at a state legislative hearing looking into what Maryland's role should be in assisting local defense contractors as they adjust to a peacetime economy. He said a contract needed to be negotiated, but expressed confidence that it was only a matter of time. "They have selected us," he said before the hearing. "There is no ambiguity about that."

He told the House Appropriations Committee that the Pratt & Whitney pact would be a major step toward Martin's goal of becoming one of the world's leading makers of thrust reversers, which act as brakes for landing jets.

Mr. Antinucci told the lawmakers that the market value for the thrust reversers could exceed $60 billion over the next 20 years.

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