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Lockheed, Loral in Satellite Talks

Telecom: Combination of manufacturing operations is under discussion to cut costs, compete with Boeing.

June 06, 2002|PETER PAE | TIMES STAFF WRITER

Battered by a slowdown in the telecom industry, two of the nation's largest commercial satellite makers are talking to each other about the possibility of combining their manufacturing operations.

Lockheed Martin Corp. and Loral Space & Communications Ltd., the second- and third-largest satellite makers in the U.S., have been mulling a joint venture for several months but have not come to an agreement on personnel and financial issues, company sources said Wednesday.

The report follows comments in March by Loral Chairman Bernard L. Schwartz, who hinted at an analysts' conference that a combination of the two operations was a possibility as a way to compete against Boeing Co., the nation's largest commercial satellite maker.

The two companies have significant satellite-making operations in the San Jose area and combining them would help the companies cut overhead and personnel costs.

The move is in response to a significant drop in orders for commercial satellites with the slump in the telecommunications industry, and most analysts do not see much of an improvement any time soon.

The number of commercial satellites launched worldwide declined by more than half to about 30 in 2000 from 65 in 1999 and is expected to remain that way for a few more years, according to Teal Group, an aerospace research firm in Fairfax, Va.

The slump has been so severe that even industry leader Boeing is looking to slash 25% of its work force in El Segundo.

In April, Boeing said it was eliminating 800 jobs on top of the 1,050 it had announced two months earlier and warned that an additional 500 positions could be cut by year end.

A Lockheed spokesman declined to comment about the report. Loral officials couldn't be reached Wednesday.

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