Lockheed's with-drawl has a shrewd accent to it; Georgia's Nunn chairs Senate Armed Services panel.

Lockheed's with-drawl has a shrewd accent to it

Georgia's Nunn chairs Senate Armed Services panel

Lockheed Corp. announced plans after a day-long board meeting Tuesday to move virtually all of the aerospace giant's airplane production in Burbank to Marietta, Ga., and the remainder to Palmdale.

The announcement immediately drew speculation that the planned move to the home state of the chairman of the Senate Armed Services Committee, Sen. Sam Nunn (D-Ga.), was politically motivated. His help, it was reasoned, could prove crucial to Calabasas-based Lockheed for two major defense programs:

* Lockheed's troubled P-7A maritime patrol aircraft, under development for the U.S. Navy, is behind schedule and over budget. Indeed, after taking a $600 million charge last year for cost overruns on the program, Lockheed has been negotiating with the Pentagon to avoid further charges, and Nunn's aid could prove beneficial to the company.

* Lockheed heads one of the two teams vying for the contract to produce 750 Advanced Tactical Fighters for the U.S. Air Force. If the Lockheed-led team beats the competing team, led by Century City-based Northrop Corp., Lockheed's part of the production pie would be done in Marietta, something that should not displease Nunn.

Commenting on the politics of Lockheed's announced move, noted analyst Wolfgang H. Demisch allowed: "I'm sure it's a consideration." The equity research director of UBS Securities in New York also said there are wage and tax advantages in Georgia. That has to be important to Lockheed, Demisch indicated, for "the main problem of the P-7A is cost."

The move to Georgia will slash Lockheed's operating costs by more than $50 million a year, a company spokesman said, and trim capital spending by $75 million through 1994. Moreover, Lockheed hopes to convert its fixed assets -- 320 acres and 5.6 million square feet of buildings -- in Burbank to hundreds of millions of dollars of cash to reduce debt and repurchase stock.

Another reason for the move, Demisch said, is that Lockheed's core airplane business has devolved down to the C-130 transport, which the company has produced in Marietta for years.

Lockheed's airplane production in Burbank has been riding the "going-out-of-business curve:"

The last P-3 Orion for the U.S. Navy was delivered last month, and delivery of the remaining orders for six of the antisubmarine patrol aircraft from two foreign nations is scheduled for completion next year from Burbank. The last of the F-117A Stealth Fighters is scheduled for delivery to the U.S. Air Force sometime this year here.

As a result, Lockheed announced April 27, some 2,000 employees in Los Angeles County will be laid off.

Lockheed, of course, has been moving gradually out of what once long had been the company's home: Missiles & Space group settled in Sunnyvale; C-140 and C-5 production settled in Marietta; corporate headquarters more recently moved to Calabasas; certain airplane engineering activity moved to Rye Canyon while certain final airframe assembly moved to Palmdale.

Last Tuesday's announcement by Daniel Tellep, chairman and chief executive officer, furthered Lockheed's long-anticipated move from Burbank.

"A few hundred employees are being offered the opportunity to move to Georgia," a spokesman estimated, and perhaps 65 percent (roughly 1,500) of the 2,300 employees eligible for early retirement will take it.

To be eligible for early retirement, an employee must be at least 55 years old and have at least 10 years of service with the company, the spokesman said. Normally, he said, an employee is eligible for regular retirement benefits at age 65 and after 20 years of service.

Age 65 and 20 years of service add up to the magic number of 85 points required for full retirement benefits. Employees accepting the early retirement offer will get an extra three years added to age and another three years to service to compute retirement benefits, the spokesman said.

The exact timetable for moving Burbank employees to Marietta, to Palmdale and for lay offs remains confusingly up in the air.

Some 800 engineers, designers and manufacturing employees working on the demonstration and validation phase of the Advanced Tactical Fighter program will remain in L.A. County presumably until the production contract is awarded. This phase of the program also requires manufacture of two prototypes, and that will be done in L.A. County.

If the Lockheed-led team wins the competition, though, the company's production will be done in Marietta.

Likewise, engineers working in Rye Canyon on full-scale engineering development of the P-7A program will continue there until that phase is completed. But the prototype and production phases will be done in Marietta.

One part of Lockheed's airplane business, the "Skunk Works" that specializes in classified development and low-volume production of secret advanced development projects, largely will remain in Burbank to the mid-1990s. Typical Skunk Works programs include: the U-2 and SR-71 reconnaissance aircraft and F-117A Stealth Fighter, a spokesman said.

After the mid-1990s, he added, the Skunk Works will complete its move to Palmdale. Just what the Skunk Works is up to, what with the F-117A running out its string this year and the last SR-71 already delivered, remains secret.

However, Lawrence M. Harris, senior aerospace analyst as Bateman Eichler, Hill Richards Inc., L.A.-based securities firm, offered an opinion of what may be in the works currently. He posited the Skunk Works is developing the Aurora, an advanced version of the SR-71, and/or an advanced version of the F-117A Stealth Fighter.

Nonetheless, Lockheed's plans to move most of its aeronautical activities to Marietta for cost and other reasons must be considered bad news for L.A.'s economy, for aerospace is the county's largest manufacturing employer. Just last month Long Beach-based Douglas Aircraft Co. announced layoffs, too, and plans to move production of the troubled C-17 Air Force transport program, which is behind schedule and over budget, to St. Louis.

Northrop's troubled B-2 Advanced Technology (Stealth) Bomber program here for the Air Force is behind schedule also and so badly over budget that the number of planes to be built already has been cut. Indeed, the entire program may face cancellation if legislators seeking a "peace dividend" have their way in Congress.

California's two senators are likely to be of little or no political help to the beleaguered industry here: Republican Pete Wilson is a lame duck because of his announced plans to run for governor, and Democrat Alan Cranston has been such a particularly vocal opponent of defense spending for so long he probably has negative clout in the Pentagon.