Billions are at stake as Lockheed battles Northrop for jet contract; the Air Force wants 750 advanced tactical fighters.

Billions are at stake as Lockheed battles Northrop for jet contract

The Air Force wants 750 advanced tactical fighters

Thousands of jobs and billions of dollars are at stake in Los Angeles County in the competition for the contract to produce a new advanced tactical fighter jet for the Air Force.

Even though two Los Angeles-based companies are leading teams in the competition, the region will win only if Northrop is awarded the contract, which could be worth between $80 billion and $120 billion.

According to Lockheed, the other Los Angeles-area aerospace company pursuing the contract, if it wins, most of the work will be done at facilities in Marieta, Ga.

Northrop said if it wins, all the work on the aircraft would be done at its Pico Rivera facility.

Lockheed, which some industry analysts said so far is winning the competition, is also considering reducing its Los Angeles area employment by another 700 or 800 jobs, said spokesman Scott Hallman.

So far this year, the company has announced job cuts of 2,750 in the Los Angeles area. Hallman said the additional layoffs could be made later this year as the company completes four other projects.

The Air Force, which has ordered 750 copies of the advanced tactical fighter, is not expected to make a decision on the contract until next spring or summer, but the Northrop and Lockheed teams already have spent about $1 billion to develop prototypes of the aircraft, which will be the country's most advanced fighter aircraft.

In addition to the Air Force, the Navy wants to buy a modified version of the aircraft. Air Force spokesman Kathy Higgins said the Navy has ordered between 400 and 450 of the jets.

Hallman said work on the aircraft would be done at Lockheed, Boeing and General Dynamics' facilities around the country but the final assembly would be at Lockheed manufacturing plants in Georgia.

Regardless of who wins the contract, "Lockheed would still have a significant presence in Southern California, we would retain our headquarters in Calabasas and facilities in Palmdale. We are even keeping some of our buildings in Burbank. But some restructuring might have to be done if Northrop wins," said Hallman.

Hallman declined to be more specific.

Lockheed is transferring much of its operations from Burbank to Marietta.

Jim Taft, a spokesman for Northrop, which is leading a team that includes McDonnell Douglas, another major defense contractor with a large presence in Long Beach, said winning the contract could result in hundreds or maybe thousands of new jobs in the region.

"Right now we have about 500 people working on the project and McDonnell Douglas has about 500, so you can see that winning the contract means we could be hiring a substantial number of people," said Taft.

Both Northrop and McDonnell Douglas have laid off thousands of area workers during the past 18 months because of uncertainty over future government spending.

"This could be the last big fighter contract for Southern California for some time," said Taft.

The advance tactical fighter would be capable of eluding radar detection and is designed more for air-to-air superiority than air-to-land maneuvers. The aircraft will replace the F-15, which will be more than 20 years old when production on the new plane is scheduled to begin in 1996.

Northrop flight tested one of its two prototypes two weeks ago and Lockheed is scheduled to fly its first prototype later this month.

Defense industry analysts said the contract is important to both companies but it also has its drawbacks.

One industry analyst said Lockheed already has an edge in the competition because it has flight tested the jet's avionics system in a Boeing 757.

Lawrence Harris of Bateman Eichler, Hill Richards in Los Angeles also said Lockheed may have an advantage because of its good record on the production of 59 F-117A stealth fighters, many of which have been sent to Saudi Arabia since the beginning of the Persian Gulf crisis in early August.

"But it is quite important for both companies. For Northrop it would reduce its dependence on the B-2 and it would help the aeronautics division of Lockheed, which has been declining," he said.

He said, however, that both companies could survive not winning the contract.

"I would not expect anything dramatic to happen because they would have written off their expense and in the meantime developed some technology that could be used later," he said.

Other analysts were less sanguine.

"In the long run, it could hurt the loser because they could lose their foothold as a mainframe builder of fighters in this country," said Michael Rosen of Smith Barney in New York.

He added, however, that in the short term, the loser may be the winner because of the expense involved in developing the aircraft.

Wolfgang Demisch, who heads the research department at UBS Phillips & Drew Securities in New York, said the competition is a risk for both companies.

"They have a 50-50 chance to make some money but you have to remember that they have put a billion dollars down already and will have to spend some more. It's a risk because by the time it goes into production there could be new technology available and who knows what the political environment will be like," he said.

Demisch said he has been against any defense contractor getting involved in the competition because of the risks.

"I know that is their business (defense work) and I am just a guy on the sidelines but I have said from the beginning that this is a foolish venture. I bet if you ask the companies that were involved in the preliminary competition they would say they are glad they are out of it."

PHOTO : Northrop Corp.'s version of the advanced tactical fighter jet

PHOTO : Lockheed Corp. rolled its model of the advanced tactical fighter out last week