Defense firms expect little U.S. financial aid

April 06, 1993|By Ted Shelsby | Ted Shelsby,Staff Writer

GREENBELT -- Last month when President Clinton visited the Westinghouse plant in Linthicum, he promised $1.7 billion in federal money to help the nation's defense industry convert to new commercial markets.

"That's about as much as we need in Baltimore," John T. Tymann, a Westinghouse executive told a gathering of about 200 of his defense and aerospace colleagues yesterday. "I don't know what the rest of you are going to do."

Mr. Tymann, president of the Westinghouse Electronic Systems Co., was one of more than a dozen industry officials who shared their view of the future at an all-day conference on "Global Diversification of the Defense and Aerospace Industries."

The message was clear: Defense companies can expect little financial assistance from the federal government in dealing with tough times ahead as they try to convert to a peacetime economy.

While the speakers generally agreed on the problems they face,there was widespread disagreement on the best approach.

While Mr. Tymann talked about Westinghouse's plan to have 50 percent of its sales coming from commercial markets by 1995, Norman R. Augustine, chairman and chief executive of Martin Marietta Corp., warned against this approach.

He told of defense contractors' past moves into the production of buses, canoes, banjos and coffins and added: "Our record is unblemished by success."

As Mr. Augustine sees things, consolidation is the way to go. He believes that the U.S. defense industry has to follow the lead of European companies in forming fewer -- but bigger -- defense contractors to reduce overhead.

In line with that, the Justice Department gave final approval last week to Martin's $3.05 billion purchase of General Electric Corp.'s aerospace division, creating the world's largest

aerospace electronics company.

Mr. Tymann told the conference, held at the Goddard Space Flight Center and sponsored by the Maryland World Trade Center Institute, that Westinghouse was also looking to expand abroad by moving into countries where it already had a presence with joint ventures or acquisitions.

In vying for new contracts in Europe, he said, "It makes more sense to bid as a European company than an American company."

Mr. Tymann made clear that defense contractors also needed to think in terms of dual-use technology for both military and commercial markets.

As an example of a missed opportunity, Mr. Tymann noted that Westinghouse developed the world's first videocassette recorder at its plant in Linthicum. It was made in conjunction with a lunar camera that astronauts carried to the moon in the 1960s.

"We didn't make a nickel off it," he said with an expression of agony on his face. "We didn't have a strategy [at that time] to pursue it."

Hughes Aircraft Co. is looking at its own opportunity to diversify into the home entertainment business. Anthony J. Iorillo, a senior vice president, said the company was working on a television satellite system that would reduce the size of the receiver dish in a user's home to about 18 inches in diameter.

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