Fighter Contract Lifts Northrop.

Spirits Soar as Lockheed Lands Largest-Ever Deal

For the folks who work at Northrop Grumman Corp.'s El Segundo plant, Oct. 26 was a long time coming.

Not since 1981, with the B-2 Stealth Bomber, had Northrop won a major victory on a military aircraft program. But when Lockheed Martin Corp. was recently announced winner of the $200 billion Joint Strike Fighter contract - with Northrop a key team member - the drought had ended.

"I would compare it to winning the seventh game of the World Series," said Jim Weiner, Northrop's JSF program information technology manager.

Workers in El Segundo gathered in a manufacturing bay to view the announcement of the win over Boeing Co. on a big screen. "They erupted in hugs and cheers" said George Legg, JSF business manager for Northrop's Air Combat Systems unit. "This is the first big win that we had in many years."

It's hard to underestimate the importance of the JSF win, for Northrop, for its workers, or for the broader L.A.-area economy. Northrop delivered its last B-2 to the Air Force in 1999. It now builds the center and aft fuselage of the F/A-l8 Super Hornet, and some replacement parts for other aircraft. That program will run at least 10 more years.

But the JSF, now billed as the F-35, was an all-or-nothing competition for what is expected to be the last manned fighter jet the United States will build. Versions will be used by all three military branches - a conventional version for the Air Force, a carrier version for the Navy and one for short takeoffs and landings for the Marines. Winning ensures that Northrop can continue in the military electronics and aerostructures business.

The program will pump between $30 billion and $40 billion into the El Segundo-based Air Combat Systems operation between now and 2040, when the all-purpose fighter jet is expected to end its service life.

"It's a pillar under the economy for the next 40 years. You can't ask for anything better than that," said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

Employment boost

At a time when the local aerospace industry is losing more than 10,000 jobs a year, Northrop will add at least 1,000 jobs in El Segundo during the development phase. (About 3,500 are employed there now.) Another 800 to 900 jobs will be created for local subcontracters and suppliers, Kyser estimated - providing at least a 1 percent boost to county aerospace and high-tech employment.

Indeed, the four major machine shops that Northrop will use as subcontractors are all based locally, including Brek Manufacturing Co. in Gardena and Arden Engineering Inc. in Orange.

Due to the nature of the work, most of it will stay within Northrop. "This work is more, labor intensive for us than most of our programs," said Legg.

During the development phase of the contract, Northrop will design and integrate the center fuselage and weapons bay of the fighter jet, along with the corresponding electronic and hydraulic subsystems. (Another Northrop team in Baltimore will design the fire control radar system.) About 15 percent of the work will be subcontracted out during this phase, which lasts until 2012, Legg said. During production, which will begin in perhaps eight years, outsourced work will rise to about 25 percent.

In Palmdale, where assembly will most likely take place, Northrop plans to add another 200 jobs during the development phase.

Meanwhile, Lockheed plans to add 20 to 30. jobs at its own Palmdale facility, where it will build some wing components, antenna and the radome - the nose cover over the radar. Lockheed currently employs about 350 workers in Palmdale. Final assembly will take place in Fort Worth, Texas.

The production phase is too far off to estimate hiring, said Northrop spokesman Jim Hart.

Dogged determination

Northrop's major role in the JSF program - overall it will share in an estimated 20 percent. in F-35 revenues-is a testament to the company's resilience, and that of its workers.

In 1996, Northrop was on a McDonnell Douglas Corp.-led team that was kicked out of the competition for JSF, creating a two-horse race between Boeing and Lockheed. Within a month McDonnell Douglas - considered the premier defense contractor for most of the 1980s and early '90s - folded its hand and agreed to be purchased by Boeing.

Northrop had to do something as well.

Six months later we went, hats in our hands, to Lockheed," said Ram Ramkumar, a Northrop program officer.

A very small Northrop team, perhaps two dozen people, began working with Lockheed. Those efforts were eventually formalized in a 1999 work-share agreement. In addition to Northrop's 20 percent stake in JSF project dollars, BAE Systems PLC of the U.K., another McDonnell Douglas team member, will get an estimated 12 percent.

"It took a lot of effort for us to earn our work share," Ramkumar said. "Any time you can own a work share with people you competed against before, it's not easy."

For Ramkumar, courting Lockheed meant commuting each week from L.A. to Fort Worth, Monday to Thursday, for three and a half years. "It was a big sacrifice, something I wouldn't do again," he said. "The only good think I can say about it is the family is still together."

Integral team approach

Ramkumar credits Lockheed with being open to a substantial Northrop contribution. "I think they had the customer's input, telling them areas where we were good."

Within the first year, there were several Northrop employees in positions of leadership for the overall project. The head of the mission systems team, for example, is a Northrop employee.

The results were impressive. Pentagon officials said the Lockheed team was the front-runner in the competition for the past two years. However, team members had no way of knowing, except that things appeared to be working smoothly.

Hal Graves, a 29-year Northrop veteran and manager of engineering, design and analysis for e JSF, recounts the first internal acid-test of he Lockheed proposal last September. The "red-team review" brought in sages from outside the team to critique the plan. "This was one of the first red-team reviews where no one said, 'Gee, why don't we do it (some other) way,"' he said.

At Northrop, which underwent extensive restructuring during the 1990s and survived a ailed merger with by Lockheed in 1998, spirits e as high as people can remember.

"With the ramp-up there's going to be plenty of opportunities here that weren't available before," Weiner said. He remembers when Northrop lost the competition for what became the F-18.

Another longtime Northrop employee, Mike Jeftic, recalls the lean years. "We had a lot of good people that we don't have working here anymore," he said. "It was a very painful period, but it just makes the win that much more satisfying."

Many of the new jobs at Northrop will be in highly specialized areas of engineering - from software, to structural design and analysis, to avionics systems engineers, Legg said.

Some of those people will come from within, he said, and others may come from the losing Boeing team in St. Louis or Seattle.

Northrop will also be hiring younger engineers as it shifts into growth mode. "We'll be hiring a substantial number of engineers out of college," Legg said. "We haven't had that opportunity in a long time."