Ford Aerospace Wins Defense System Contract : Defense: The initial order, valued at $21.4 million, could generate much more in sales and attract potential buyers to the firm.
Ford Aerospace Corp. said Tuesday that it has received its first production order for a new missile guidance system, a contract that could set the stage for hundreds of millions of dollars in sales through the 1990s and make the firm more attractive to potential buyers.
The initial order for the so-called low-cost seeker portion of the Navy’s high-speed anti-radiation missile (HARM) is valued at $21.4 million and calls for the manufacture of 100 of the guidance system units. The missile became operational in 1984, but the new guidance system has just been developed by Ford Aerospace.
If the Navy continues to build the HARM at the current rate of roughly 1,500 per year, Ford could gain substantially larger contracts.
Ford Motor Co. announced earlier this year that it wants to sell its aerospace operation, and the HARM contract should make the subsidiary more attractive, analysts said. It will be a particularly welcome boost for the subsidiary’s Newport Beach Aeronutronic division, which builds the seeker but is considered one of the more vulnerable parts of the far-flung Ford Aerospace operation.
“This is a very positive development,” said C. E. Grubbs, a former Ford Aerospace manager and now a defense consultant in Newport Beach. “It lends a couple of years of stability and is good for morale at Aeronutronic. It definitely increases the salability of the company.”
An initial round of bids for Ford Aerospace was received at the beginning of March, but the company has not disclosed who submitted bids or whether the offers were for the entire subsidiary or only for individual divisions. Ford has said that it wants to sell the company, which analysts value at $500 million to $800 million, in one piece, but many experts believe that it will be forced to sell it piecemeal.
The HARM missile destroys radar and anti-aircraft systems by homing in on the radio frequencies they emit. The missile is built by Texas Instruments, but the seeker portion of the system has accounted for about half the purchase price, which stands at about $200,000 per missile.
Ford Aerospace won a competition in 1988 to develop a lower-cost version of the HARM seeker that would also perform better against improved enemy radar systems, and the firm received $13.7 million to develop the technology and build pre-production units. The Navy’s decision to go ahead with production means that 100 of the 1,604 HARM missiles to be built in 1990 will have the Ford seeker. The remainder will use existing Texas Instruments components.
Curt James of Texas Instruments’ weapons systems marketing group said the 1991 defense budget, which has not yet been approved by Congress, calls for 1,440 HARM missiles, of which 240 would use the Ford seeker. Texas Instruments is also developing its own version of a new seeker, James added, though it is not yet in production.
James said there would eventually be a competition between Texas Instruments and Ford Aerospace for the seeker business. Ford spokeswoman Susan Pearce said the company may even bid against Texas Instruments to try to become the prime contractor for the HARM.
But James and Pearce noted that the number of the Ford seekers ultimately ordered is heavily dependent on the Pentagon budget. The number of HARM missiles purchased by the Navy already has fallen from 2,400 a year several years ago to the 1,440 projected for 1991, and no one is willing to rule out further cuts. Navy officials could not be reached for comment.
