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Aerospace Swords Into Plowshares : Defense Contractors Convert to Consumer Goods and Brush Up on Their Rusty Marketing Skills


At TRW Space and Electronics Group in Redondo Beach, engineers who once designed missile guidance systems now develop radar devices that will help get a Winnebago driver safely to Disneyland.

At Aura Systems Inc. in El Segundo, technicians who once created electromagnetic devices for the Strategic Defense Initiative now rig pillows with hi-tech speakers to provide couch potatoes a new experience in television sound.

And at a Torrance unit of Hughes Aircraft Co., designers who provided power systems for fighter-jet radar are now perfecting electric charging stations for battery-driven cars.

Increasingly, South Bay aerospace contractors are entering the brave new world of defense conversion, taking Cold War technology and putting it to commercial uses. The South Bay, in fact, has become a conversion showcase. In the past two months, defense department officials, Vice President Albert Gore and members of Congress have visited local plants to tout conversion as a cure for ailing, defense-based economies.

In June, Los Angeles County corporate chieftains, university presidents and government officials formed the High Technology Council, which is expected to pay close attention to the South Bay in its drive to promote conversion efforts.

"The South Bay is a premiere laboratory for the entire grand experiment," said Rohit Shukla, director of aerospace and high technology business for the Los Angeles County Economic Development Corp., a nonprofit group promoting business growth. "It's one of the areas hit the worst, but it's also poised to make the biggest recovery."

There is, to be sure, concern that the experiment could fail.

Some doubt that defense businesses, so accustomed to dealing with the Pentagon, can successfully adapt to the hurly-burly of the private market. These skeptics say contractors lack a crucial skill: consumer marketing. And contractors themselves downplay the job payoff from their new ventures, mindful of the failure of conversion efforts in the 1970s.

Then there's the sluggish economy.

"The sum total of all (the conversion work) that is being done can have an impact," said Joan Horn, chairwoman of the Defense Reinvestment Assistance Task Force for the Department of Defense. "But in the final analysis, the economy has to move."

Still, aerospace companies with plants in the South Bay are clearly banking on a conversion payoff. Given recent economic trends, many experts say, the gamble is worth the effort. Since 1989, the South Bay has lost 63,100 jobs, many of them in areas of heavy defense spending, such as the manufacture of missiles, space vehicles, instruments and electronic components.

"There's going to be a lot of wrenching going on and a significant loss of jobs," said Shukla. But (with conversion) what we will get are more (responsive,) market-driven companies."

For now, many contractors consider conversion a sidelight to their defense work. A recent study conducted by A. T. Kearney and the Los Angeles County Economic Development Corp. showed that smaller companies are the ones most aggressively pursuing conversion projects. Of the 70 Los Angeles County companies surveyed, 60% of the suppliers and 29% of the subcontractors were pursuing conversion work. Only 10% of prime contractors had projects on the table.

"It's a little easier (for the smaller companies)," said former Gov. George Deukmejian, chairman of the Economic Development Corp. "There's not that huge bureaucracy, and they can make decisions very quickly."

One such company is Aura Systems in El Segundo, which was formed in 1987 to develop electromagnetics and optical technology for the Strategic Defense Initiative.

By 1990, with SDI's prospects dimming, Aura's executives decided to concentrate on commercial markets. The company now has a slew of projects in development, including a lightweight television speaker with less distortion, greater bass output and higher volume than most on the market. Daewoo Electronics Corp., a consumer electronics company in Korea, plans to order 2 million of the speakers by next June, bringing in $4 million for Aura.

Aura's other projects include a more efficient valve system for car engines, an improved technique for cataract surgery and a spool-like device, to be connected to movie theater seats, that converts sound energy into vibrations. A home version of the vibration machine, to be called PillowSonics, is due on the market this fall.

Aura is also developing a high-definition television and a movie projector that would eliminate the need to distribute celluloid prints to hundreds of theaters each time a film opens. Movie signals would be beamed from a studio via satellite to the theaters, and the projectors could screen an image that matches the quality of film.

Said Larry Shultz, Aura's senior vice president of audio and video technologies: "The day of the second-run theaters will be over."

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