Defense Industry

Right now it's a Wall Street story. The battle between Martin Marietta and Northrop to gobble up Grumman is reminiscent of the "Pac-man" wars of the Eighties, with giant corporations trying to eat up one another lest they get eaten. In this case, Grumman was a morsel waiting to be consumed since the Navy ended its glorious era as manufacturer of F-14 Hellcats. But when Bethesda-based Martin made the friendly bid for Grumman, Los Angeles-based Northrop countered with a hostile higher offer.

Timothy Picciotti, a computer engineer who worked in defense systems and was active in Howard County youth athletics, died of cancer Dec. 27 at his Highland home. He was 46. Born in Akron, Ohio, he was the son of an electrical engineer and a homemaker. He earned a mathematics degree at Mount Union College in Alliance, Ohio, and was hired by Westinghouse. He then came to Baltimore and worked in software systems engineering and technical management of airborne radar programs. He later earned two Bachelor of Science degrees, in mathematics and computer science, and a Master of Science degree from the Johns Hopkins University.

MERGER MANIA is leading to a concentration of power in the defense industry that would make President Eisenhower recoil. Boeing is going to swallow McDonnell Douglas, with government approval. Lockheed Martin and Northrop Grumman, each the product of previous consolidations, have agreed to merge. Raytheon will combine with Hughes Aircraft in the fall.At the end of the Cold War, 20 major contractors were selling weapons systems to the Pentagon. A few years later, only a dozen. And then there were three, plus strays like General Dynamics.

Northrop Grumman Corp.'s plan to cut 500 jobs in the Baltimore region — largely through buyouts but also with 70 layoffs — underscores the uncomfortable shift defense contractors are feeling as the era of big spending growth ends. The Baltimore-area reductions account for most of the nationwide cuts Northrop Grumman is making to its electronic systems sector, which produces airborne radar, navigation systems and other military equipment. The defense-contracting giant notified affected employees at the sector's Linthicum headquarters and several other locations Tuesday that their last day of work would be May 31. Northrop Grumman blamed a reduction in business "that is directly related to the current slow-down in defense spending as well as increasing international economic pressures" — a problem facing not only the industry but the state.

The nation's defense contractors have eliminated more than a million jobs since Pentagon spending began its sharp decline in 1988. Maryland, the fifth-most defense-dependent state in the country, has felt the brunt of these cuts. Three of the state's largest defense contractors, Lockheed Martin Corp., AAI Corp. and Westinghouse Electric Corp., have eliminated more than 12,000 jobs in recent years.The bad news for defense workers continued last week when the Johns Hopkins University Applied Physics Laboratory -- one of the nation's largest defense research institutions -- announced that it will cut its work force by about 350 jobs because of defense-spending cutbacks.

"Settling out" is never a process that holds much excitement. It's something that happens in geology over millions of years, in middle age seemingly overnight, and in the defense industry it's on the plate for 1998.The Big Three companies will twitch here and shave there and settle into shape. The lower tier of suppliers will go through a bit of consolidation. The odd unit or bloc of jobs will get "rationalized."Nothing resembling the high drama of the last two or three years, when enormous companies shifted and merged like plates of the Earth's crust and whole segments of the industry were remade.

WASHINGTON -- Employment in the defense and aerospace industry is expected to fall next year to its lowest level since Dwight D. Eisenhower was president, the leader of an industry trade group said yesterday.In his annual year-end review and forecast luncheon at the Capital Hilton yesterday, Aerospace Industries Association President Donald Fuqua said the industry is expected to shed 34,000 jobs in 1995, after losing 71,000 this year.Speaking to more than 500 officials of defense and areospace companies, including Westinghouse Electric Corp.

Long regarded as a prominent and powerful symbol of the national defense industry, Norman R. Augustine said yesterday that he will retire as chief executive officer of Lockheed Martin Corp. to teach, travel and pursue hobbies.Augustine, 61, engineered the 1995 merger of Martin Marietta Corp. and Lockheed Corp., which created the biggest defense company in the world, and in the process pioneered the reconfiguration of an industry through gigantic mergers and acquisitions."There's a time to get out of the way, and this is my time," he said yesterday in an interview.

By choosing to wage a hostile takeover bid for TRW Inc., Northrop Grumman Corp. picked a fight not just with TRW's management but also with Ohio's tough anti-takeover laws and a host of skeptics on Wall Street intent on driving up the price, analysts said yesterday. Observers seemed surprised by Northrop Grum- man's decision to take its $47-per-share buyout offer straight to TRW's shareholders, one day after TRW's board rejected the offer as "financially inadequate." Not only could the move add costs to a deal already considered a stretch for Northrop Grumman, they said, but it also could enflame an industry where hostile suitors are often not well received.

ARLINGTON, Va. -- Even as Lockheed Martin Corp. talks with Europe's Airbus Industrie about possible joint ventures, the Bethesda-based company's departing chief executive officer cautioned yesterday against American defense companies getting too friendly with their overseas counterparts.Norman R. Augustine, the grand master of the corporate merger strategy that is remaking the American defense industry, said at an aerospace conference that conditions are not yet right to make the trend international.

Werner A. Uebersax, a retired Catonsville Community College electronics department chairman and former aeronautical engineer, died in his sleep of stroke complications Saturday at the Blakehurst Retirement Community. He was 91 and had lived in Sparks. Born in Baltimore, he grew up in the rowhouse alongside his father's Fenwick Bakery, then located off Harford Road near Clifton Park. When he and a brother, Walter, contracted typhoid fever, his father and mother closed the bakery for more than two months and nursed their sons to health.

Giant defense contractor Northrop Grumman said Monday that it plans to move its corporate headquarters from Los Angeles to the Washington area by 2011, solidifying the growing importance of Washington as a center for the defense industry and other businesses. Northrop executives said they are looking for a site in Maryland, Virginia or the District and plan to identify one by this spring. The company, whose biggest customer is the Pentagon, makes military planes, tanks, ships and other equipment.

From preschool to graduate school, Maryland needs to more strongly emphasize math, science and language to help produce the future mathematicians, engineers and linguists needed to meet the military's demand at Fort Meade, the National Security Agency and Aberdeen Proving Ground, state and defense industry leaders said yesterday. Lt. Gov. Anthony G. Brown said that while he hoped local school systems will remain "true to the fundamentals of reading, writing and math," the forces of the base realignment and closure process "should be reflected in the curriculum."

Northrop Grumman Corp., which employs 9,000 in Maryland, said yesterday that it is eliminating about 400 manufacturing jobs at its Linthicum campus, where the defense contractor develops and builds radar systems and a host of electronic sensors and networks that act as the eyes and ears for the U.S. military. Northrop said it would offer about 1,000 employees a voluntary severance package including up to 50 weeks pay, depending on years of service. If fewer than 400 volunteers take the buyout, the company will institute involuntary layoffs.

Conflict-of-interest allegations involving a defense contract that could be worth more than half a billion dollars over 10 years have left potentially hundreds of engineers and staff in Annapolis wondering who will be signing their paychecks in coming years. Alion Science and Technology Corp., which for decades has been making sure military communications are static-free, was told this month that the Defense Department was not going to renew its contract, which expires Oct. 31. Instead, the work is going to a competitor that Alion says has a financial stake in the communications equipment the military buys.

If America winds up bombing Baghdad again, the law of the capitalist jungle is this: Iraq's misfortune means the defense industry's good fortune.The first Persian Gulf war served as an unimaginably expensive infomercial for American arms makers, whose CNN-touted wares became the most coveted in the world.Another conflict is unlikely to have as dramatic an impact, but would highlight a new generation of precision guided weapons that -- macabre as it may sound -- could give a boost to defense electronics powerhouse Raytheon Co."

After a stormy period of downsizing and consolidation that rumbled through the defense industry in Maryland eight years ago, real estate and economic development executives fretted over who would occupy the volumes of office space vacated by defense firms slashing operations near Baltimore-Washington International Airport.The answer is upstart high-tech ventures looking for an affordable place to grow, such as the company founded by David Manyak, a former Merrill Lynch biotechnology analyst.