Martin chief knew where he wanted to take firm

August 31, 1994|By Patricia Horn | Patricia Horn,Sun Staff Writer

Yesterday's announced merger with Lockheed Corp. is only the latest -- if the most spectacular -- in a string of acquisitions and mergers pursued by Martin Marietta Corp.'s chairman and chief executive, Norman R. Augustine.

In 1988, when Mr. Augustine took over the CEO's reins at Bethesda-based Martin Marietta, he foresaw a shrinking Pentagon budget and a resulting shakeout in the defense industry. His strategy for Martin: grow through friendly acquisitions, grab a bigger piece of a smaller pie, and emerge as one of a few strong survivors in the post-Cold War era.

Assuming the merger comes off as planned, Mr. Augustine will find himself at the pinnacle of an unrivaled defense behemoth. Plans call for him to become chairman and CEO of the new Lockheed Martin after the retirement of Daniel M. Tellep, the current Lockheed chairman who will initially hold the top spot.

"He's certainly one of the best in our industry; that's widely felt," Mr. Tellep told the Wall Street Journal earlier this year. "His strategy is crystal clear, and I think he's executing it well."

Over the past two years, the 59-year-old Mr. Augustine doubled Martin Marietta's size, primarily through acquisitions. In 1993, Martin acquired General Electric's aerospace business for $3.05 billion, making it the world's largest aerospace and electronics company. And this year, the company acquired the space systems division of General Dynamics Corp., thereby combining its Atlas rocket with its own Titan program.

But Mr. Augustine has not sought growth at any cost. In April, he backed away from a fight with Northrop Corp. after it outbid Martin for Grumman Corp.

His aversion to hostile takeovers, he later told The Sun, stems from Martin's 1982 fight to thwart an unwanted bid from Bendix Corp. Martin ended up buying Bendix instead -- the so-called Pac-Man defense -- but it assumed so much debt that it was forced to sell three of its five major business groups.

It "totally changed the character of our company," Mr. Augustine said. He termed the toll on Martin Marietta and its employees "devastating."

"That experience clearly led me to believe that strategic alliances put together quietly among thoughtful managements is a better way to build the future of American industry rather than a bunch of investment bankers and arbitrageurs deciding who wants to put the most debt on a company," he said.

Considered an expert on defense procurement, Mr. Augustine was on a Clinton administration list of possible successors to Defense Secretary Les Aspin early this year until he made it known he was not interested. In 1990, he co-authored "The Defense Revolution" with syndicated columnist Kenneth Adelman.

Mr. Augustine served a two-year stint as an undersecretary of the Army. He also served in various capacities for the Defense Department during the late 1960s and mid-1970s.

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