DONALD R. BEALL, Chairman and chief executive, Rockwell International Corp.

Donald R. Beall, a Corona del Mar resident and the top executive of an $11.9-billion company, no longer needs to take a helicopter to work. After moving its headquarters from El Segundo to Seal Beach last week, Rockwell surpassed Fluor Corp. as Orange County’s biggest company. Despite a gloomy, short-term outlook, Beall expects the diversified technology company’s revenue to grow at an average annual rate of 7%, including 2% a year in defense, through 1996. Beall spoke about his business with staff writer Dean Takahashi.

The economists say that the aerospace industry in California will lose 24,000 jobs next year and 20,000 jobs the year after that. What is your own outlook for the future of the aerospace industry?

There is no question it’s going down. I think for Rockwell, where we are today, we will have additional adjustments in our work force. But the bulk of our cuts related to our government work, both Department of Defense and NASA, are behind us.

We’ve gone through a tremendous reduction (from 109,000 in 1989 to 87,000 in 1991), largely in our defense business with the wind-down of the B-1 bomber.

The bid to win the Navy’s AX (next-generation attack fighter) program has been viewed as Rockwell’s bid to stay in the defense/aerospace business. Is that a fair assessment and does it represent a major part of your strategy for the future?

I think the fact that Rockwell has experienced a reduction in its defense business to 25% from 55% (of revenue) has suggested to some that we’re de-emphasizing defense. Just the opposite is true.

We are scrapping even harder today to secure new orders in a more constrained market. The fact we’re bidding on AX is nothing unusual to us.

I hope I’m making myself clear. Think of it this way: Rockwell has a leadership position serving businesses in factory automation, commercial telecommunications, avionics, defense electronics, certain automotive markets, graphics and in aerospace. We are a market leader in every one of those areas, but our position in those markets fluctuates. That’s what happened in defense.

How do you think the realities of the marketplace are changing? Are we at the bottom of the recession?

Nationally, I think we’re at the bottom. I have been concerned for some time, many months, that the conventional wisdom of how quickly we have come out of this thing was too optimistic. Unfortunately, I was right. I’ve been very concerned that the kind of massive layoffs we have seen suggest a structural change that is occurring over and above the natural economics that go with either recessions or recoveries.

If you were in the room with George Bush, is there anything you would impress upon him if you only had five minutes?

If I did, I don’t think I would say it on the front page of the business section of the L.A. Times, with all due respect. I’m very concerned about the deficit. We shouldn’t do anything to raise spending or reduce taxes if it affects the deficit. I’m sensitive to those issues, and I believe in them. But having said that, I think we need to do something to encourage more investment and work harder on the infrastructure of this country.

How about California? You’ve heard a lot about environmental regulations and other things that are making businesses leave.

I think this state definitely has to do something about the whole set of situations that have led to such ridiculous levels of workmen’s compensation.

It is a fact that if you’re out trying to expand, it takes a lot longer to get through all the regulatory hurdles. I think the governor has done some things about them and I think he’ll do more.

It’s nine months down the road now since the Persian Gulf War. What did it mean for the industry?

Coupled with the geopolitical realities of what is happening in Eastern Europe, the Gulf War has changed our whole focus in defense requirements to tactical, rather than strategic. I hope the importance of high technology employed in weapons, command, communications, guidance, and navigation, is recognized. Not just from the industry’s point of view, but from the country’s point of view, the quality of people and training, gave us a level of preparedness that was extremely important. I hope we recognize you can’t really back off on those things.

Do you think the additional changes in the Soviet Union will lead to another round of defense cuts?

Sure. I think that’s inevitable, given the more hopeful outcome to how the evolution of what was the Soviet Union progresses.

The indictment of your Cedar Rapids, Iowa-based, Collins subsidiary (for allegedly overcharging NASA for space shuttle parts) . . . how concerned are you about its impact on the company’s image?

I’m extremely concerned every time our reputation for integrity in how we conduct business is questioned. We do not believe the company is guilty of any of the allegations. We are going to contest the indictment. Ironically, when this suspension occurred on a Monday, I was up at UCLA teaching an ethics course in the Graduate School of Business. I took the class through all of it and why we thought there was no wrongdoing.

Are you looking forward to working behind the Orange Curtain in your headquarters in Seal Beach?

We’ve got a facility in Seal Beach and it’s a damn good one. We’re in a rented building here, and for a lot of good reasons, it makes us operate more effectively and economically in a facility that we own.

We’re going to be the largest company based in Orange County, but that’s not our motivation for moving.

Are you going to look forward to driving, instead of flying, to work?

Yeah, right. Does that always have to be part of the story? (he laughs).

On strategic partnerships. . .

“It’s more and more a thing of the future. Now we’re more often selling a solution to a customer problem, which you can’t do with just your own products.”

On aerospace in Southern California. . .

“It’s going to get worse before it gets better. It has gotten a lot of attention, and it is important. I think the bulk of the reductions that are occurring are simply a winding down of the business.”

On Rockwell’s outlook. . .

“Rockwell’s performance is very dependent on the economy worldwide. Our earnings will be down for the first half of our 1992 fiscal year. If we see some improvement in the economy in the latter half of 1992, we can improve our earnings.”

On Japanese competition. . .

“American business needs to relearn or learn from the best of the companies in Japan.”