Parker Bertea Wins Contract for MD-12 Role : Aerospace: Its being named to build flight control systems for Douglas Aircraft’s new jetliner is victory for the struggling industry in O.C.
Orange County’s struggling aerospace industry scored a rare victory when Parker Bertea Aerospace announced Tuesday that it has won a subcontract from Douglas Aircraft Co. to build flight control systems for the planned MD-12 commercial airliner.
The subcontract--the first awarded by Douglas for the MD-12--could potentially generate $1 billion in revenue over a 20-year period for a contracting team headed by Parker Bertea. But the amount Parker Bertea ultimately gets depends on Douglas’ success at marketing the MD-12 to the world’s airlines.
The jumbo aircraft, cornerstone of Douglas’ long-term strategy in the commercial aerospace business, is scheduled for initial delivery in 1997. But Douglas has not announced any orders since it began marketing the jet to airlines in October, 1991.
“It’s rewarding in these difficult times in the aerospace business to get a contract like this,” said Robert Rau, president of Parker Bertea, who announced the award to a thousand cheering employees in Irvine. “We are aware there isn’t a lot of business around.”
Large aerospace firms such as Rockwell International, Hughes Aircraft and Loral Aerospace have announced plans to slash 1,300 jobs in Orange County since the beginning of the year. Ten months ago, Parker Bertea laid off 240 people because of dwindling defense revenue.
Rau said the company would employ 30 to 40 workers on the development program immediately and eventually could employ 250 in three company divisions in peak production.
But Parker is unlikely to add many new jobs. Many of the 250 positions could come from Parker’s existing 3,000-person work force in Irvine, which has been hit by layoffs as the company’s aerospace contracts phase down, he said.
Over the long term, Rau said, Parker Bertea’s local work force will probably continue to shrink. “It’s 250 jobs we wouldn’t have without this contract,” he said.
Under the subcontract, Parker Bertea and two partners could also employ another 350 people outside California. Those jobs would be at other Parker Bertea units, at Sundstrand Aerospace Mechanical Systems in Rockford, Ill., and at Teijin Seiki in Gifu, Japan.
The MD-12 itself will be assembled outside California. Douglas Vice President Richard Thomas said the company is looking at nine cities for a site for the final assembly plant, which could employ 5,600 people.
The long-range MD-12, a larger version of the MD-11 wide-body jet in production in Long Beach, is aimed at capturing part of Boeing’s 747 jumbo jet market.
There is no guarantee that the airlines will go along, said John Simon, an analyst at Seidler Amdec Securities Inc. in Los Angeles.
“There’s no question it’s going to be a tough sell, and that there is competition from Boeing,” he said.
Simon said Douglas Aircraft must first overcome the financing hurdle for the $4-billion development program. Parent company McDonnell Douglas Corp. is attempting to sell a 40% interest in Douglas Aircraft, primarily to Taiwan Aerospace.
The Taiwan deal has been a center of controversy because some fear that foreign investment in the aerospace business could challenge the United States’ leadership in that industry.
Production of the 400- to 500-seat MD-12 is expected to begin in the summer of 1994, Thomas said. Douglas Aircraft employs about 1,000 of its 32,000 employees in Long Beach in the development program, said spokesman John Thom.
Rau said Parker Bertea is bidding on other subcontracts, such as the fuel and hydraulics systems, for the MD-12. But he said the flight control system has the biggest potential for the company. Philip Rowberg, a Douglas general manager on the project, said the Parker Bertea award is one of the 20 largest subcontracts expected to be awarded for the program.
Parker Bertea, a subsidiary of Parker-Hannifin Corp. in Cleveland, won’t receive any revenue for developing the prototype parts for the aircraft. Any payoff will be in mass production of parts.
Douglas officials said Parker Bertea’s team beat competing bids from contracting teams headed by H.R. Textron in Valencia and Lucas Aerospace in England.
MD-12 at a Glance
Douglas Aircraft Co. awarded a contract to Parker Bertea Aerospace in Irvine to build flight control systems for the planned MD-12 commercial airliner. The first formal orders are expected later this year.
MD-12 Jetliner Manufacturer: Douglas Aircraft Co., Long Beach
Estimated development cost: $4 billion to $5 billion
Type: Long-range, wide-body aircraft, a larger version of the MD-11
Flying range: Up to 8,000 nautical miles (enough to fly nonstop from Los Angeles to Seoul, South Korea)
Delivery: First aircraft could be ready in 1997
Possible final assembly plant locations: Belleville, Ill.; Ft. Worth and Houston, Tex.; Kansas City, Mo.; Mesa, Ariz.; Mobile, Ala.; Salt Lake City, Utah; Shreveport, La.; Tulsa, Okla.
Potential employment: 5,600
Flight control system
Manufacturer: Parker Bertea Aerospace, Irvine
Value: $1 billion over estimated 20-year life of program
Potential employment: 250 in Irvine, 350 elsewhere
Partners: Sundstrand Aerospace Mechanical Systems in Rockford, Ill., and Teijin Seiki in Gifu, Japan
Contract: To supply actuators, or hydraulic-powered devices that control wing flaps and rudders
Source: Douglas Aircraft Co., Parker Bertea Aerospace
