DONALD RASSIER : Ford Aerospace Settling In : President Foresees Prosperity in Firm’s New Location

A hand-lettered sign taped to the wall outside the office door reading “Donald Rassier: president” seemed a bit inappropriate for the head of a large defense contractor.

On this recent morning, however, Ford Aerospace President Rassier was just settling in to his new office on the fifth floor of a Newport Beach high-rise. There hadn’t been time to put up a formal-looking nameplate for his office.

Rassier, 59, came West when Ford Aerospace moved its headquarters from downtown Detroit to Newport Beach this summer to be closer to its customers and its own defense plants in Orange County and the Bay Area. About 50 staff members relocated to Newport Beach.

Though the headquarters move gives Ford Aerospace a higher profile in the county, the defense firm has had a major presence locally since 1960, when it located its Aeroneutronics division here.

Ford’s Newport Beach plant has a work force of 3,000, and the company employs 4,500 others at its facilities in Palo Alto, Sunnyvale and Mountain View. Worldwide employment is 17,000.

Rassier, who is also a vice president of Ford Motor Co., was hired as Ford Aerospace’s president in April, 1985. Before that he was executive vice president of Fairchild Industries and chief executive officer of the Aerospace Group. He spent 28 years in various posts with Rockwell International, most recently as vice president and general manager of Rockwell’s missile systems division.

Ford Aerospace produces ground systems for NASA, commercial satellites, command, control, communications and intelligence equipment, and tactical weapons. The Aeroneutronics division produces the Sidewinder and Chaparral missiles, electro-optical systems and ammunition.

In a recent interview with Times staff writer David Olmos, Rassier discussed Ford Aerospace’s operations in Orange County, the business outlook for his company and the defense industry in general, and the ongoing investigations into Pentagon fraud and abuse.

Q. In June, the Justice Department announced that it had searched the property of several consultants and government employees and 16 defense contractors as part of an investigation into possible corruption involving the Pentagon and private contractors. The investigation is continuing, although no indictments have yet been handed down. Do you think the ongoing Justice Department investigation into Pentagon procurement fraud and abuses will have a lasting impact on the defense industry?

A. I think the long-term impact will depend on whether or not it causes more legislation to be written to further regulate the industry. It’s a very regulated industry now, and if you add more regulation to that it’s going to slow things down. It’s going to take longer to write specifications; it’s going to take longer to make a contract; it’s going to take longer to do anything. All that will have a negative impact. In my view, the industry doesn’t need more regulation. I don’t think the public really understands that. There have been a couple of instances where people allegedly have done bad things. The press continues to harp over those things time and again. People outside the industry are reading the papers and thinking, ‘My God, the whole industry is bad.’

Q. What do you think is the best way for the defense industry to reduce fraud and abuses?

A Self-governance. Clearly the industry has to take care of what it’s doing. It cannot run a sloppy shop. Companies have to have a high code of ethics. And they have to make sure that their people understand that (code of ethics). We (Ford Aerospace) have gone through an enormous amount of training to ensure that our management and our workers recognize that it’s very important to do things in accordance with our code of ethics and in accordance with government parameters.

Q. Does Ford Aerospace have a code of ethics for its employees?

A Our code of ethics is the same as the other companies that have joined the Defense Industry Initiatives. There are six specific guidelines that are written down. We were, I think, the 12th or 13th company to sign up, and now there are 50 or 60 companies. The DII has been accepted by the Department of Defense as being a good initiative, assuming that it’s carried out and implemented. Our real chore now is implementing the program. We have to make sure that the employees understand that you do have a written code of ethics. If anybody in the company sees something going on that they don’t feel is right, they can report it without any fear of retribution. If they can’t get their boss to recognize the problem, then they can go over him. Each organization has a person designated who they can call anonymously and report an incident, and that incident will be investigated. We want you to do your job right. We want you to write down your time very exactly and if somebody asks you to do something you don’t think is right, raise your hand or talk to somebody. The mind-set has been that you never go over your boss’s head, you never do this and never do that. So it’s taken some time to break down that idea.

Q. And have your employees reported incidents?

A Yes.

Q. Are there reports frequently?

A. No.

Q. Has this program helped stop situations in which abuses were taking place?

A. I think so. In fact we have released people who didn’t think this was important, who just didn’t get with it. We can’t tolerate that.

Q. As a result of the Pentagon fraud case, has Ford Aerospace taken a closer look at its procedures for monitoring possible cases of fraud and abuse?

A. Yes, we’ve gone back through our codes (of ethics) and looked at how we can protect ourselves even better than we have in the past. But I don’t recall anything having been changed. I think our current system’s working very well. It’s just that we haven’t been able to communicate that outside of the industry. It’s a boring, grueling kind of thing for us, the medical profession or any other profession to really get in and self-govern itself.

Q. Ford Aerospace had contract awards last year of $1.3 billion. (Ford Motor Co. doesn’t break out revenue or earnings figures for Ford Aerospace.) What is Ford Aerospace doing to grow its business at a time when there is general agreement that Pentagon budgets are headed for flat or lower growth? What types of changes does that force you to make in your business game plan?

A. You always have to make changes, but particularly in the face of flat or decreasing budgets. It causes us to focus on our strengths. We have changed in terms of the different kinds of businesses we are pursuing. A couple years ago, we were in 10 to 12 different businesses. Today, we’re concentrating on two. That’s a marked difference. Those two areas are command, control, communications and intelligence (known in defense parlance as C3I), and tactical weapons systems. We have put our assets and our technology in these two areas. Our results clearly will be better as there are more strengths in those areas. If you look at the Pentagon budget being flat or decreasing, that is on an overall basis. There are some subsets of that budget that are growing, and we happen to concentrate in the areas of growth. So we’re really not working in a down market; we’re working in an up market.

Q. What kind of revenue growth are you forecasting for your business?

A We are somewhere in the 10% to 12% growth rate. We think we can do better than that. But I don’t think you can grow successfully faster than that. I think this year we’ll be closer to 14%, but that’s unusual.

Q. Last June, Ford Aerospace acquired BDM, a well-known defense consulting firm that provides professional and technical services in the early development stages of new weapons programs. How will that acquisition help you?

A. BDM has some very good people that are good at acquisition analysis. They understand weapons systems. There is a high synergistic activity between what our people do in designing and building products, and their analysis. It can save us from developing products where we really do not have the right capability or we don’t understand what the requirement is about. In this business, if you wait for a request for proposal (the start of the formal bidding process for a defense contract, when the military services release contract specifications and requirements) and then try to respond to it, you are going to do a very poor job. You have to understand and have tracked that requirement for years before the request for proposal is ready. In order to do that, you have to recognize these requirements are coming about. For example, we look at satellites and we say: What is a satellite going to be like 10 years from now? Today, satellites are dumb; that is, they have to be ground-controlled. In the future, they ought to be able to be self-contained and not depend on ground control. So what’s important is the futuristic thinking about new products. We can put BDM’s expertise together with our people who actually design our products. It makes for a very good marriage.

Q. So are you saying that the BDM acquisition should help you win more programs?

A Yes. We can now focus on the specific products that we think we can do much better on. Our win ratio (the number of competitive contracts bid on versus the number of contracts actually awarded) should improve.

Q. Has that win ratio been a weakness of Ford Aerospace in the past?

A. Well, I don’t know if it’s a weakness. If you want to be best in class, you work on your strengths. You want to improve your win ratio. The projects you have worked on and lost are a waste, right? So you want to eliminate those. To the extent that you can focus on and bring up your win ratio, the more profitable you can be.

Q. What is Ford Aerospace’s win ratio?

A. It is probably about 33%. And you want to win more than a third of what you bid on.

Q. What impact will the Intermediate Range Nuclear Forces treaty have on Ford Aerospace’s tactical weapons business? (The INF treaty, signed last June by President Reagan and Soviet President Mikhail S. Gorbachev, eliminates U.S. and Soviet intermediate-range nuclear forces.)

A. (The agreement) really puts the pressure on conventional weapons to carry the load or respond to the threat. In order to respond to the threat, you have to say if I’m not restricted nuclear then I have to depend on something else. For some years, conventional forces have been underfunded. It was always expected that the nuclear deterrent would be the thing to depend on in a conflict. If that (the nuclear deterrent) is out--and it’s certainly not out with INF, but it’s a start down that road--then you have to look to conventional weapons. A major subset of conventional weapons is tactical weapons, such as missiles, which we work on. Therefore, for now and for the foreseeable future, there will be more opportunities to build up the conventional forces.

Q. So that helps your business?

A. It helps.

Q. Can you describe the AAWS-M portable anti-tank weapon program that the Aeroneutronics division is working on?

A. AAWS-M is an advanced anti-tank missile system. The tank gets more complex as they redesign new ones, and the complexity goes into your ability to penetrate it, to kill it. And therefore the newer missiles have to be able to penetrate these more advanced tanks. And that’s what AAWS-M does. But the missile cannot weigh more than 45 pounds because it has to be carried by a foot soldier. It is shoulder-fired, hand-carried, very small and it has to be very effective.

Q. Does the move of Ford Aerospace’s headquarters to Orange County signal any change of plans for your local operations?

A. No, I don’t think it signals that at all. The aerospace industry is larger here than almost any other place in the United States. In the future, there are going to be more joint ventures and teaming between aerospace companies than in the past. With Ozam, for example, we’re teaming with General Dynamics. They are in Pomona, and it would be more difficult to get together with them from Detroit. We’re teamed with Rockwell on several other programs. In working on these joint ventures, we almost have to be in the community. It is a lot easier to work out our future plans from here than it is from Detroit. It’s not that the size of Aeroneutronics is going to double or triple, it’s just much easier for them in Southern California than it would be in Detroit. Then again, a lot takes place in Washington, so our office is really split between the two locations. I also have an office in Washington, D.C., and I try to spend my time in the two locations.