L.A. aerospace companies target foreign markets.

Percent of total sales made overseas roughly doubles

Still reeling from drastic defense cuts, Los Angeles County aerospace companies, which laid off 80,000 workers between 1990 and 1992, are trying to bounce back by selling more products to foreign countries.

And their efforts so far appear to be succeeding. Local aerospace companies' combined international sales have approximately doubled since the 1980s, reported Mike Lambert, a partner at Westchester-based Bradley-Lambert Management Specialists, a consulting firm that serves the aerospace and defense industries.

"I don't know of a single Los Angeles aerospace company that has not increased its overseas marketing effort," Lambert said.

Specifically, foreign buyers accounted for 15 to 22 percent of the total sales of Los Angeles County aerospace companies in 1992, estimated Lambert, compared with only about 8 percent during the 1980s.

But that increase in foreign sales has only slightly softened the U.S. defense spending cuts.

Those cuts were so deep in Los Angeles County that "the international marketing efforts won't stop the layoffs in the Los Angeles aerospace industry, but (the increased foreign sales) will slow (layoffs) down," Lambert said.

Exactly how deep have the defense cuts been in L.A. County? The U.S. Defense Department projects about $5 billion in defense-related expenditures will flow to L.A. County this year, less than half the $11 billion that flowed here in 1990.

Los Angeles County aerospace companies' international marketing efforts have yielded especially promising increases in exports to Turkey, Egypt, Korea, Taiwan and Singapore, Lambert said.

Unfortunately, the same can not be said about Europe. U.S. aerospace companies have trouble matching the bids of government-subsidized aerospace companies in France and the United Kingdom for the European contracts, Lambert said.

In the coming months, Lambert predicted Los Angeles County divisions of TRW Inc., Lockheed Corp., McDonnell Douglas Corp., Litton Industries, Rockwell International Corp., Northrop Corp. and Hughes Aircraft Co. will all be competing heavily to increase their international market shares. And to do so, they will have to specialize, he said.

"Lockheed wants to become the global leader in making aerospace products for the military. Bell Gardens-based Leach Corp. has decided to concentrate on making relays and, as such, has become the exclusive supplier for Boeing Corp.," Lambert said.

Middle Eastern countries are a growing market for aerospace products, but federal law prohibits U.S. manufacturers from selling many types of cutting-edge technology to foreign buyers, said Jim Sutherland, a consultant with Torrance-based Contracts Advisory Services.

In the short term, Los Angeles County aerospace companies may profit from the need to upgrade the 2,000-plane fleet of F-15 fighter jets sold to countries such as Saudi Arabia, Taiwan, Korea and Singapore in the last two decades.

"An upgrade package for an F-15 typically costs $2 million to $4 million," Sutherland said. Upgrades typically include better instrumentation, better fire control and enhanced performance packages, he added.

Northrop Corp., also looking for more offshore sales, makes parts at its Hawthorne plant for the Douglas Aircraft Co. F-18 fighter, a more-modern fighter than the F-15. Middle Eastern countries are likely to keep buying F-18s and the F-15 upgrade packages, said Northrop spokesman Terry Clawson.

"We also are a principle contractor to Boeing for their 747s," Clawson said, adding that Douglas and Boeing sell many of their planes to airlines and defense ministries throughout the world.

Northrop also has enjoyed NATO countries' steady increase in demand for the Chukar 3, a rocket that serves as a live target for fighter pilot training missions, Clawson said.

Northrop also exports a computer program that increases the effectiveness of anti-tank weapons, Clawson said. But he declined to identify which countries are buying these computer programs.

The transport aircraft unit of McDonnell Douglas Aerospace, which has manufacturing plants in Long Beach and Carson, is also hoping to sell its newest transport jet, the C-17, to foreign countries.

Division spokesman Larry McCracken said the aircraft's body and side doors are so large that transport tanks, earth-moving equipment and other bulky cargo can easily be loaded and unloaded.

"We are talking about selling some of them to NATO," McCracken said. Government officials in Britain, France, Germany, Saudi Arabia and Japan also have expressed interest in the C-17, McCracken said.

McCracken said McDonnell Douglas' transport unit is supposed to build 120 C-17s for the U.S. government by 2001, he added.

McCracken would not specify the cost of a C-17, which may be due to the fact that the C-17 program has been plagued by severe cost overruns and production delays.

Industry sources estimated, however, that McDonnell Douglas would eventually get about $300 million for each C-17 it delivered. The cost per unit could go as low as $200 million on a larger order, such as the 120-plane order by the U.S. government, industry sources estimated.

McDonnell Douglas' transport unit also is trying to sell foreign governments on the idea of converting its KC-10 cargo planes into tankers, McCracken added. He would not specify how much McDonnell Douglas would charge for such a conversion.

Meanwhile, most of the foreign sales at Douglas Aircraft Co.'s commercial aviation division are coming from foreign airlines' purchasing the division's MD-11 jets, said division spokesman John Thom.

"We still have a good backlog of orders," Thom said. But that backlog is not what it used to be, he conceded. Cut-throat air fare wars have driven profits so low that Thom said he does not know when the foreign or domestic demand will increase to former levels.