Maverick Who Helped to Build Northrop Leaves
Thomas V. Jones, the controversial chairman of Northrop Corp. who piloted the aerospace company to financial and technological heights, retired Wednesday.
Jones’ 27-year reign was highlighted by prosperity borne of daring but marred by allegations of fraud and bribery.
Northrop directors Wednesday elected Kent Kresa as chairman. He assumed Jones’ former titles of president and chief executive in January.
Jones will retain a seat on the company’s board.
At 70, Jones has not been active in daily management of Los Angeles-based Northrop since he relinquished his status as an employee in January in exchange for a post as paid consultant. Jones said in a statement that he decided to step down as chairman because Kresa is now prepared to assume full leadership responsibilities.
Kresa has “gained the confidence of the Northrop employees, the board of directors, our customers and the defense community,” Jones said.
Kresa was expected to replace Jones as chairman, but some industry analysts did not expect Wednesday’s announcement.
Jones stepped down with Northrop still under a cloud of allegations that it acted improperly in trying to induce South Korea to buy the now-defunct F-20 jet fighter.
The Times today reported that an international arbitration group has concluded that Northrop paid $6.25 million to a Korean power broker in what may have been an illegal attempt to sell the F-20 to the South Korean air force. According to the report, an arbitrator for the International Court of Arbitration rejected Northrop’s contention that the money was to be used to build a luxury hotel.
Northrop spokesman Ron Owens said Jones’ retirement was not related to the Korean allegations, which are the subject of two federal grand jury investigations.
Jones has called the F-20 one of the biggest disappointments in his career. Widely considered a maverick not beholden to Pentagon brass, Jones enhanced that reputation by initiating the development of the F-20 in the late 1970s without the blessing of the U.S. Air Force.
When the Air Force refused to buy the F-20--even though it was considered a technological success--foreign governments also backed away from the fighter. The program was scrapped without a single sale.
But many of Jones’ gambles paid off. Northrop turned the defense contracting industry on its ear in the 1980s by bidding and winning the contract for the B-2 Stealth bomber. That surprised many observers, who thought the firm lacked the experience and size to handle the multibillion-dollar program. Jones considers the B-2, unveiled in November, 1988, a top achievement.
“Jones was visionary when he realized the importance of Stealth technology,” said Lawrence Harris, an analyst at Los Angeles-based Bateman Eichler, Hill Richards. “He was (also) largely responsible for the company’s successes in the 1960s and 1970s.”
Among them was the F-5 jet fighter, which Northrop sold to many foreign governments. However, Northrop and Jones came under investigation in the mid-1970s for payoffs of foreign officials in order to spur F-5 sales. As a result, Northrop signed a consent decree in 1975 barring itfrom making payoffs.
Jones, who became Northrop’s chief executive in 1960 and chairman three years later, joined the company in 1953 as an assistant to the chief engineer. He is widely credited for helping transform a relatively small and flagging aerospace concern in the late 1950s into one of the major prime contractors in the nation.
“Jones took Northrop a long way,” said Howard Rubel, an analyst at the New York-based C.J. Lawrence, Morgan Grenfell. “But his alleged misdeeds have appeared as a detraction. His record is mixed, and it appears that he stayed on longer than he should have.”
Jones has been philosophical about his ups and downs. He talked about the controversies in an interview last year.
“Once you’re in this position, you’re subject to all kinds of speculation,” he said. “You get too much credit when things go well and too much criticism when things are not going so well.”
