Image Problem May Make It Hard to Find a Buyer for Ford Aerospace : Defense: The unit’s odd assortment of products means it will likely be broken up and sold piecemeal.

When Ford Aerospace demonstrated a new tank gun for U.S. Army leaders several years ago, the radar-controlled turret swung past its intended target and instead turned on a reviewing stand, sending the spectators diving for cover.

Although no shots were fired at the generals and Ford executives, the unfortunate incident was the sort of extraordinary faux pas that can put a lasting tarnish on a firm’s image in the defense business.

Ford Aerospace, which was put up for sale Friday, has long suffered an image problem--not so much because it builds defective products but because it has never moved to the front ranks of the markets in which it operates.

The company builds a somewhat odd collection of weapons and spacecraft, a product assortment that dates back in part to the defunct Philco refrigerator and television business that Ford acquired in the early 1960s. Ford ranks as only the nation’s 23rd-largest defense contractor.

As a result, Ford Aerospace was bound to be one of the early victims of the defense industry shakeout, in which mergers will reduce defense overcapacity amid dwindling federal arms budgets.

Analysts and defense industry insiders believe that Ford Aerospace is likely to be broken up and sold piecemeal to stronger contractors who want to bolster their own operations in such areas as tactical missiles, satellites and electronic command systems.

Separately, it was learned Friday that Carlyle Group, a Washington-based merchant banking concern of which former Defense Secretary Frank Carlucci is a vice chairman, has had discussions with Ford about a bid for its defense business. Carlyle officials could not be reached Friday.

Knowledgeable sources said Carlyle was hoping to acquire and restructure Ford Aerospace, improving what some experts consider a poorly organized operation, and then resell it.

But financial analysts believe that Ford or any intermediary will have a difficult time selling Ford Aerospace in one piece or selling even the pieces.

Defense units of Honeywell, Tracor, Kodak, Perkin Elmer and Magnavox, among others, are already up for sale, according to Joseph Campbell, Paine Webber aerospace analyst. Moreover, United Technologies was forced to take its Norden unit off the market because no buyers could be found. The same fate befell the AIL unit of Eaton.

“It will be hard for (Ford) to sell it in one piece because the pieces don’t go together,” said Joseph Campbell, aerospace analyst for the Paine Webber investment firm. “It would be hard to find somebody who will want all the pieces. Then you have to ask, how good are the pieces?”

The answer, according to many experts is: certainly not the best in the business.

While other major corporations invested billions of dollars in weapons competitions and new facilities during the 1980s, Ford milked its aerospace business for cash.

“In the early ‘80s when the car business was flat on its back . . . Ford Aerospace was delivering profit by the wheelbarrow loads to (Ford headquarters in) Dearborn,” one Ford Aerospace executive said. “To do that there were sacrifices made. Now, we are paying the price. Those sacrifices were not doing the plant modernization and technology work we should have been doing to keep ourselves competitive in the late 1980s.”

Ford Aerospace President Donald B. Rassier said Friday, “It’s true that we’re not necessarily (No.) 1 or (No.) 2 in our markets, but we’re quite diversified. And diversification is not all bad these days.”

Nonetheless, Ford’s image was badly damaged by the Sgt. York, the Army anti-aircraft gun that turned on spectators at a demonstration several years ago. That program was canceled after Ford had run up losses estimated later at $200 million and encountered unending criticism.

“I don’t know how you could find a bigger public relations fiasco than to field a weapons system that became the laughingstock of the nation,” said John Heubusch, former chief of staff for Rep. Denny Smith (R-Ore.), a major critic of the Sgt. York. “It was really one of the lemons in the 1980s.”

Ultimately, Ford Aerospace’s various business units are likely to end up with companies already doing the same type of business. Thus, the major candidates to emerge as buyers for Ford’s missile business will be domestic missile producers Raytheon, General Dynamics, Texas Instruments and Hughes Aircraft, as well as European contractors seeking a toehold in the U.S. market.

Rassier said Ford wants to sell the unit as a whole, but that it was too early to tell whether that position would change.

Sources at Hughes Aircraft said that company has been examining several pieces of Ford Aerospace but that no decision had been made to pursue an acquisition. Some sources believe that Hughes Chairman Malcolm R. Currie will be reluctant to acquire any defense operation at a time when he is attempting to increase Hughes’ non-defense business.

The Ford satellite operations could well end up with any one of the U.S. spacecraft producers, including Rockwell International, Hughes, General Electric, Lockheed, Martin Marietta or TRW.

Lockheed Chairman Daniel M. Tellep said in an interview Friday that he is not interested in buying Ford Aerospace as an entity but would look at the satellite manufacturing operation if it were made available separately.

Ford does not disclose sales for its defense business, but analysts have estimated them at anywhere from $1.7 billion to $2 billion a year.

“Ford Aerospace is solidly profitable and has continued to grow,” Ford Chairman Donald E. Petersen said Friday in a prepared statement.

Analyst Paul Nisbet of Prudential-Bache Securities estimated that Ford will fetch a low of $600 million to $700 million for its aerospace business if it sells it whole or as much as $1 billion if it sells it piecemeal. Those prices are far below what firms were selling for at the peak of the market, when a common rule of thumb was that a firm could fetch $1 for each dollar of sales.

It will also mean that Ford is likely to take a stiff loss on the $475 million it paid only two years ago for BDM, a defense consulting and engineering firm located in Washington that it merged into Ford Aerospace.

Times staff writer Jonathan Weber in Orange County contributed to this story.