Missile launcher rivalry heats up Competition: Northrop Grumman says it has developed a missile launcher for Navy ships that is superior to the system being built by Lockheed Martin at Middle River.

January 04, 1998|By Greg Schneider | Greg Schneider,SUN STAFF

A unit of Northrop Grumman Corp.'s Linthicum division has developed a new missile launcher for Navy ships that it says will blow away the system currently built by Lockheed Martin Corp. in Middle River.

The competition had better be friendly, though. Lockheed Martin plans to complete its purchase of Northrop Grumman during the first quarter of 1998, so the two sides are soon likely to be part of the same company.

It's not something either side likes to talk about, bound as they are by federal trade restrictions until the merger goes through.

"I just don't think it's appropriate to speculate on what might happen," said Rich Palmay, spokesman for Lockheed Martin's Government Electronic Systems in New Jersey.

"I don't think we can comment on that at this time," said Jack Tavares, program manager for Northrop Grumman's Next Generation Vertical Launch System.

But, Tavares hastened to add, "I think we have a better mousetrap, I can say that."

It's a relatively minor example of overlap in a corporate merger that features some programs -- such as stealth technology and electronic warfare -- in which the combination of Northrop Grumman and Lockheed Martin will shrivel national competition. Only Raytheon Corp. still competes on the same scale in electronic warfare, and no one but Northrop Grumman or Lockheed Martin has ever built a stealth, or radar-evading, aircraft.

Federal regulators haven't blinked at other such combinations, though, allowing Raytheon to buy Hughes and become the nation's only builder of air-to-air missiles. One expert doesn't expect anything to get in the way of the Lockheed-Northrop deal.

The vertical-launch business certainly shouldn't affect the transaction, said Stuart McCutchan, who publishes the Defense Mergers & Acquisitions industry newsletter. He pointed out that the Navy does have a competing supplier of launchers: United Defense LP makes them at a facility in Minnesota.

Divestiture isn't expected

"I would be very surprised if a divestiture was required" in the launcher portion of the Northrop Grumman acquisition, McCutchan said. "More likely, they'll just allow the two of them to work together and that'll be that."

Working together won't resolve all questions for Lockheed Martin's Vertical Launch Systems business in Middle River.

With roughly 250 workers, VLS is the only piece of the Middle River complex Lockheed Martin kept when it sold the surrounding aircraft parts plant to General Electric Co. in November.

The launcher business reports to Lockheed Martin's Government Electronics Systems in New Jersey, but for the time being shares basic operations such as security, phones and mail systems with the GE side.

Workers have questioned whether the arrangement is long-term; the company says it has no current plans to move VLS.

At the very least, the VLS plant has experience on its side. Its missile launchers are on 81 U.S. surface ships and 30 ships from seven countries.

Each device is like a giant cigarette pack dropped into a ship, its top set flush with the deck. VLS makes three sizes -- the biggest one 300 feet deep -- and each device can hold eight "cells" or tubes that launch up to four missiles apiece.

Northrop Grumman's new system, which looks substantially the same, just completed its first restrained missile test-firing in November.

"Northrop Grumman has only demonstrated a concept to this point, and that's much different than us," said Lockheed Martin's Palmay.

The new system is being developed by Northrop Grumman's Marine Systems in Sunnyvale, Calif., which is a unit of the Electronic Sensors & Systems Division in Linthicum. About 25 engineers at ESSD designed the electronic control system for the launcher, but otherwise the work has been done in Sunnyvale.

The Marine Systems plant there employs about 1,100 workers building missile launchers for nuclear submarines, as well as propulsion and electrical systems for both ships and subs. The facility has a long history -- it built the Navy's first steam turbine propulsion system for the USS Neptune in 1912.

Northrop Grumman acquired the outfit in 1996 when it bought ESSD from Westinghouse Electric Corp.

The idea to make a new launcher for ships grew out of the Navy's now-canceled Arsenal Ship program. ESSD led a team that included four smaller Maryland companies in a race against Lockheed Martin and General Dynamics Corp. to get the contract to build a prototype Arsenal Ship next year.

Crammed with more than 500 missiles, the Arsenal Ship was supposed to be a revolutionary new vessel that could be operated by remote control and with a small crew.

The Navy scuttled the program last fall when Congress all but cut off funds. The companies that had been working on it continue to nurse their technologies, though, because the Navy has promised that the Arsenal Ship will be part of the next generation of vessels planned for the 21st century.

That's where Northrop Grumman is now aiming its aptly named Next Generation Vertical Launch System program.

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