Lockheed Martin looks at cutback Aircraft operation in Middle River could be sold to reduce debt

'Nothing is sacred'

Sale would remove half of work done at Baltimore Co. plant

Defense and aerospace

April 26, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

NEW YORK -- Lockheed Martin Corp. may sell its jetliner thrust reverser business in Middle River to help reduce the debt incurred from its recent $9.1 billion acquisition of Loral Corp., a top company official said yesterday.

Meeting with reporters after the company's annual stockholders session, Norman R. Augustine, president and chief executive, said the world's largest defense and aerospace company will probably make some divestitures within the next year or two.

Mr. Augustine said a company task force is looking at possible divestitures, and at one time there was a long list that included many parts of the company.

That list has "been filtered down, but thrust reversers and many other things are still on the list," he said.

He emphasized, however, that no decisions have been made on the fate of various businesses and that it is too soon to predict what will happen to the Middle River thrust reverser business.

Mr. Augustine said that "nothing is sacred" and each business has to meet corporate standards to maintain its place in the Lockheed Martin family.

"Any divestitures will be modest compared to the size of the corporation," he said.

Thrust reversers are at the rear of an engine and serve as brakes for jetliners as they land.

Mr. Augustine said that the company has talked to everyone in the industry, included Rohr Inc., in Chula Vista, Calif., about the possibility of buying their thrust reverser business or forming a joint venture or some other business relationship. But these talks have not reached any agreement.

He has often said that the company expects to be No. 1 or No. 2 in any of its businesses. Lockheed Martin officials say the Middle River plant ranks third, fourth or fifth.

Thrust reversers account for about half of the work at the Baltimore County plant, which has about 1,000 workers. The plant also makes rocket launchers for use on ships.

During the stockholders meeting at the Waldorf-Astoria Hotel, Mr. Augustine, who was elected vice chairman, said that the next five years look promising for the company. Over that span he said the company expects to generate between $8 billion and $10 billion in cash flow. He said the No. 1 financial priority will be the reduction of the company's $13 billion in debt.

In answer to a question from the floor, Daniel M. Tellep, chairman, said Lockheed Martin may share its improved finances with investors in the form of a dividend increase. "But we are not committed to it," he told approximately 200 shareholders.

In another tidbit of good news, Mr. Augustine said that Lockheed Martin has its money from its investment in Loral Space & Communication Corp., the part of Loral it did not acquire.

Lockheed Martin controls 20 percent of Loral Space stock, and those shares have risen in value to about $14 per share from the $7 per share that Lockheed Martin paid earlier this year.

William Mann, a security guard at a company plant in Sunnyvale, Calif., used the stockholders meeting to make a plea to Mr. Augustine and Mr. Tellep to intervene in contract negotiations in hopes of saving the jobs of 78 guards.

Mr. Mann distributed a flier that said guards are being asked to take a $2.66 per hour pay cut or be replaced by an outside security company. He said the plant once had 386 guards.

Mr. Augustine said he would not negotiate the contract at the meeting and blamed the reduction in guards on the 72 percent decline in the Pentagon's procurement budget since 1987.

During the meeting, shareholders approved the company's slate of directors, its choice for an independent auditor and a deferred management incentive compensation plan. They refused to adopt new environmental standards, which were proposed by an outside group.

Pub Date: 4/26/96

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