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Can Hughes Advance GM Car Building? : Others Failed in Bids to Blend Commercial, Defense Technology

June 23, 1985|RALPH VARTABEDIAN | Times Staff Writer

Rockwell International, which emerged in the 1960s as a world leader in aerospace technology, thought that it had seized the ideal opportunity to commercialize its know-how when it acquired Admiral Corp. in 1973.

Compared to Rockwell's Apollo spaceships that were sending U.S. astronauts to the moon and its electronic guidance systems on nuclear missiles, Admiral's television and household appliance business seemed like technical child's play.

When Rockwell developed the "electronic Cadillac" of televisions, however, nobody wanted to buy it. The firm quickly discovered how little household appliances have in common with spacecraft. By 1979, it had dropped its strategy and sold off the last of Admiral's product lines.

Rockwell's dismal experience with Admiral is representative of the difficulties other firms have encountered in their attempts to tap California's bustling weapons industry for commercial technology. While a few diversified firms have successfully interchanged military and commercial technologies, a history of glaring failures attests to the difficulty of the undertaking.

Similar Strategy

Now comes General Motors with a similar strategy and even greater aspirations for its $5.2-billion acquisition of Hughes Aircraft, announced earlier this month.

GM Chairman Roger Smith said Hughes' engineering capabilities will lead to "redefining the basic car or truck from a mechanical product, which includes a few electrical sub-systems, to one with major electromechanical and electronic elements."

Will Hughes technology enable GM to build higher quality cars or introduce new automotive gadgets that will win consumers' enthusiasm, as Smith hopes? Will GM outperform foreign competition by tapping the best of America's weapons technology?

While GM's vision wins kudos from many aerospace executives, scientific leaders and financial analysts, the strategy also has generated widespread skepticism among the experts who have seen such strategies come apart before.

"There is no easy way of doing it and many times people underestimate the requirements it takes to accomplish synergy," said Arden L. Bement Jr., vice president of technical resources at TRW Corp. "Technology transfer sometimes gives you a head start, but it isn't a panacea. And it might be just as difficult to accomplish as obtaining the technology (from) outside the company."

Bement should know. Of all the diversified defense companies that have attempted technological synergy--a functioning blend of separate parts--TRW has been as successful as any. And yet the firm is still trying to perfect its ability to interchange technology some 27 years after it was created by merger.

May Take Decades

Although GM may also succeed with Hughes, the blending of the two diverse corporate cultures will not be completed in fiscal quarters or years, but in decades, experts say.

"The biggest flaw with aerospace going commercial has been impatience," says Wolfgang Demisch, aerospace analyst at First Boston Corp. "The translation of technology from aerospace to commercial products will take at a minimum one decade, and probably more like 15 to 20 years."

Simon Ramo, who co-founded TRW after leaving Hughes Aircraft in 1953, agrees that GM faces a long and difficult job in converting Hughes technology to commercial use.

"You would think that a company as large as GM and a company with the technology that Hughes has would be able to develop a capability that neither one would have alone," says Ramo. "But it would be naive to say something general about a situation that is going to depend on very detailed planning by GM."

That's the optimistic view. Many aerospace experts believe that GM is looking in the wrong direction if it truly wants to improve its product and not simply diversify its operations.

"All GM needs to do to build a better car is learn how to spell quality," says retired Air Force General William Henry, who, as the former commander of the Air Force Space Division in Los Angeles, was directly responsible for managing many of Hughes' highest technology programs.

"I look at the service records of all the automobile manufacturers and I have to admit that I bite my lip and buy a Toyota," Henry adds. "Maybe one thing that GM can learn from Hughes is how to build a quality product--but then Hughes doesn't have such a great reputation in that area either."

Far Down the Road

GM has given no hint of how soon it expects Hughes to begin making concrete contributions to GM's automobiles. Hughes Chairman Allen Puckett said in a recent interview that he knows very little about building cars and any contributions from Hughes are very far down the road.

"The defense industry is very, very different from commercial business," Puckett said. "We will have to continue to run our defense business in the same way as we have in the past."

Puckett's observation strikes at the very heart of why commercializing military technology has been so difficult in the past: It exists in a different world.

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