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Lockheed's Long Stay in Valley May Be Ending

August 30, 1994|JAMES F. PELTZ and CHIP JOHNSON | TIMES STAFF WRITER

Lockheed Corp.--which in World War II employed 90,000 people in Burbank and during the mid-1970s brought in more money than any other business based in the San Fernando Valley--appears to be closing out a process of withdrawal from the Valley, its home base for generations.

Monday's revelation that the aerospace giant is merging with Martin Marietta Corp. will presumably result in the closure of Lockheed's 250-employee headquarters in Calabasas, because the two companies said the combined corporation will be based in Bethesda, Md., Martin Marietta's headquarters.

Lockheed, which has built cutting-edge military aircraft at its Burbank base since the 1930s, and made the "Skunk Works" there synonymous with wizardry in advanced military aircraft design since World War II, has been pulling out of the Valley for some years.

At its height during World War II, Lockheed employed 90,000 people in 1943 when it was producing P-38s, B-17 Flying Fortress bombers and other military aircraft that provided the United States with military air superiority it has never relinquished.

In 1974, the aerospace concern led all San Fernando Valley-based businesses with $3 billion in annual sales. But only 20 years later, bulldozers rolled over the last buildings of the famed Skunk Works, named for a moonshine whiskey distillery in the popular 1940s comic strip "L'il Abner."

Lockheed's California work force has been cut by more than 15,000 in recent years because of layoffs and transfers. In May, 1990, Lockheed announced a decision to relocate its Aeronautical Systems Co. division in Burbank to Marietta, Ga., eliminating 4,500 of its 14,000 local jobs.

By 1993, after shifting the Skunk Works to Palmdale--where it still has about 3,000 employees--the company employed only 4,850 workers in the San Fernando Valley area, including its headquarters in Calabasas.

Lockheed today employs 77,500 worldwide, but only 20,000 in California, including a plant in Sunnyvale, which has also cut thousands of jobs.

The merger with Martin Marietta Corp. comes after Lockheed survived a hostile takeover threat and the brutal downturn in Pentagon spending to become one of the industry's strongest players.

Led by Chairman Daniel M. Tellep, Calabasas-based Lockheed used some acquisitions--notably its purchase of General Dynamics Corp.'s F-16 fighter-jet division last year for $1.5 billion--to jump from the middle of the aerospace pack into one of the Defense Department's biggest suppliers.

Lockheed's profits simultaneously have climbed steadily over the past three years, with the company earning $422 million in 1993 on sales of $13.1 billion. In the process, Lockheed's stock has doubled since 1990, closing Monday at $66 a share in New York Stock Exchange composite trading.

The company, which traces its roots to 1913, has been one of the nation's venerable airplane manufacturers for decades. Besides the F-16 line, Lockheed's planes include the F-117A Stealth fighter (used widely in the Persian Gulf War), the SR-71 spy plane and the C-130 transport.

Lockheed also is the lead partner in development of the Air Force's next-generation tactical fighter, the F-22, which could bring Lockheed billions of dollars of revenue in the 21st Century. Some in the Pentagon and Congress, however, are pushing to delay development of the plane to save money.

Lockheed also is a leading producer of missiles (including the ballistic missiles fired from Trident submarines) and communications satellites. The company also provides an array of services to the National Aeronautics and Space Administration, including servicing the space shuttles between flights.

Indeed, Lockheed is aggressively trying to find new commercial markets to lessen its dependence on the Pentagon. Tellep told reporters in May that while Lockheed now derives 62% of its revenue from the Defense Department, it hopes to cut that figure to 40% by the late 1990s.

Lockheed will need new sources of revenue despite its recent gains. The Pentagon not only has been scaling back its orders for the proposed F-22, but has said it won't buy any more F-16s, which are built in Fort Worth, Tex., after this year.

The F-16 backlog still totals several hundred planes, thanks in part to foreign orders. But the F-16 also has recently lost key sales to foreign governments, which chose McDonnell Douglas Corp.'s F/A-18 and F-15 jets instead.

Some of Lockheed's other diversification attempts have met with mixed success. Its commercial aircraft-refurbishing unit, for instance, had to close its facility at Norton Air Force Base earlier this year for lack of customers.

Still, other efforts look promising, such as Lockheed's recently formed venture to market Russian-made Proton space-launch rockets to satellite customers.

Tellep will remain chairman of Lockheed Martin, while Martin Marietta's high-profile chairman, Norman R. Augustine, will be president. Augustine is expected to become chairman when Tellep retires.

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