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Newport Plant Put in Limbo by Ford Sale : Defense industry: With the aerospace subsidiary under new ownership, the future of its Aeronutronic division in Orange County is up in the air.

July 24, 1990|JONATHAN WEBER | TIMES STAFF WRITER

NEWPORT BEACH — Ford Motor Co.'s announcement Monday that it has agreed to sell its Ford Aerospace subsidiary to Loral Corp. did little to clarify the future for the 2,700 employees at the firm's Aeronutronic defense plant here, in part because the lease on the plant's property is not included in the sale.

In addition, some analysts said Loral, a New York-based defense electronics company, is likely to sell off portions of Ford Aerospace that do not complement its own operations. For example, the Newport Beach division manufactures the venerable Sidewinder and Chaparral missiles, but missiles do not fit with Loral's existing operations, analysts said.

Some Ford Aerospace employees leaving the Newport Beach plant Monday afternoon said they had not received enough information to know how the sale will affect them.

"We don't know enough to say much," said Norman Potter, a materials scientist who held a blue paper handout announcing the sale to employees. "Nobody knows much about (Loral)."

Ford's Aeronutronic division occupies 99 prime, ocean-view acres that the company leases from the Irvine Co. under a contract that expires in 2052. Sources said Monday that the lease was not included in the sale and that the buyer of Ford Aerospace would be required to vacate the property within five years.

A Loral spokeswoman said there were no current plans to sell pieces of Ford Aerospace.

But Loral will assume a large debt burden with its acquisition, and some Wall Street analysts expect the company to sell some operations, possibly including the Virginia-based consultant BDM International Inc., a satellite manufacturing operation in Silicon Valley and themissile group in Newport Beach.

Michael Beltramo, a Los Angeles defense consultant, speculated that Hughes Aircraft Co., which submitted a losing bid for Ford Aerospace in conjunction with Alcatel of France, may be interested in buying the missile business. A Hughes spokesman declined to comment on that possibility.

Ford purchased the Aeronutronic business in 1956 and moved the operation to Newport Beach in 1960. The division grew rapidly in the 1960s and 1970s on the strength of the Sidewinder air-to-air missile and Chaparral surface-to-air missile programs. In the 1970s, the Pave Tack bomb-targeting system also became a significant source of revenue.

The division was highly profitable in the 1970s and early 1980s, former executives have said, and employment at one point reached 3,500. But these officials say Ford failed to invest adequately in the operation.

Aeronutronic suffered a major blow in 1985 when the Pentagon canceled the problem-plagued Sgt. York tank-mounted gun program after an investment of $1.8 billion. That resulted in 1,300 layoffs at the Newport Beach plant.

More recently, the Aeronutronic unit has struggled with production problems and a decline in orders for its mainstay missile products. Sources have said the division is not currently profitable. Still, the firm did receive a lift earlier this year when it received orders for a potentially lucrative missile-guidance system, and the company's electro-optics technology is highly regarded in the industry.

The sale of the Aeronutronic unit to another company would not guarantee the operation's move from Newport Beach, but a large defense firm might choose to relocate production to its own facilities elsewhere.

And that possibility worries Richard Luehrs, president of the Newport Harbor Area Chamber of Commerce.

"We are concerned about the economic impact," Luehrs said. "We don't know what the intent of the buyer might be. It doesn't matter who owns it; the question is whether or not it remains an employment center."

Times staff writers Chris Woodyard, Michael Flagg and Dean Takahashi contributed to this story.

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