Aerospace companies look for business overseas.

Aerospace companies look for business overseas

Douglas Aircraft in Long Beach has been actively promoting two of its commercial aircraft, including its new widebody MD-11, in the Soviet Union for sale to Aeroflot, the state-run national airline.

In addition, the division of McDonnell Douglas Inc. is trying to sell commercial aircraft to other Eastern Bloc countries, including Poland, Czechoslovakia and Romania.

At a division of Lockheed Corp. in Calabasas, the company is negotiating with the Turkish government to operate an airport there.

Those are just a couple of the examples of how most Los Angeles County defense and aerospace companies are adjusting to the changing political environment by searching for new markets overseas. Just two or three years ago, many of those markets were closed to the aerospace giants, who have laid off thousands of Los Angeles County workers during the past year because of U.S. defense cuts.

But whether the new markets will be able to save Southland jobs is still questionable, mainly because more countries are developing their own defense and aerospace industries. In addition, many countries are requiring coproduction agreements, which means manufacturing facilities would have to be constructed outside of the United States, said David Vadas, an economist with the Washington D.C.-based Aerospace Industries Association.

"Going overseas is definitely an important issue for contractors and the industry is working to ease trade restrictions, but there is a global economy today and that means a lot more competition. Before, U.S. defense and aerospace contractors virtually had a monopoly on the market, but not any more," said Vadas.

In September, Douglas Aircraft was invited to the Moscow Air Show to display and promote its MD-11 and its smaller MD-80 commercial aircraft.

"We don't have any orders yet, but just a couple of years ago we couldn't even talk to them (the Soviets) about our aircraft and now we can go to their air show and demonstrate our products," said Douglas spokesman Don Hanson. "There are still restrictions but it's opening up. The market there for us is potentially very large."

Douglas is the second largest producer of aircraft in the United States, behind Seattle-based Boeing, and has sold MD-80s to China, which is part of a deal requiring that a coproduction facility be built in Shanghai.

In addition to marketing their products overseas, defense and aerospace contractors in the Los Angeles area are converting their technology to civilian uses in the United States.

For instance, at TRW Space and Defense Sector in Redondo Beach, a division of TRW Inc., which employs 15,000 people in the Los Angeles area, the company is designing an electrical security system for the New York Stock Exchange, said company spokesman John Booth.

"We can't let the technology that we have developed go by the wayside. The industry has to try to open up new fields and new markets," Booth said. "I can't give you specifics of what we are doing overseas because much of it is highly sensitive. But I can tell you that we have started to look to overseas markets."

One of the few defense contractors that is not actively pursuing the foreign or civilian markets is Century City-based Northrop Corp., which has large manufacturing facilities in Pico Rivera and Hawthorne.

"I believe we have closed all of our overseas offices and are completely committed to our defense work in this country," said company spokesman James Taft. "With our B-2 and ATF (Advanced Tactical Fighter) programs we believe that the defense industry is not going to go away in this country. The business is tougher but we believe with our stealth technology and other advanced manufacturing capabilities, there will be need here in the United States."

Vadas of the Aerospace Industries Association said in 1986, U.S. defense contractors exported $4.9 billion in military equipment in 1986, compared to $6.5 billion in 1989. Commercial exports, including aircraft, increased from $14.8 billion in 1986 to $25.6 billion last year, he said.

"The reason that the commercial side of the business has gone up so much faster is that it is much more market sensitive than the military side," Vadas said. "But I think the military side is catching up and will become more attuned to overseas markets."

At the request of its defense and aerospace contractor members, the Aerospace Industries Association is currently trying to ease trade restrictions on both military and commercial exports, he said.

Even though there is a move to disarm in many parts of the world, namely in the United States, Europe and the Soviet Union, there are countries that are building up their military armament and represent new customers for U.S. contractors, Vadas said.

"The Pacific Rim countries and Asian countries are building their military forces and many contractors are looking to new customers there," he said.

Vadas noted, however, that many of those agreements require the U.S. contractor to build coproduction facilities overseas, which means the new business does not necessarily represent more jobs at home.

He said even the disarmament of Europe could produce overseas contracts for U.S. companies, though, because of the demand for verification systems, which usually involved the use of satellites.