City to Hire Lawyers in Bid to Stop Hughes

The San Diego City Council on Tuesday authorized the city attorney to retain a Washington law firm to explore the possibility of opposing Hughes Aircraft’s proposed acquisition of General Dynamics’ missile operations on antitrust grounds.

At Mayor Maureen O’Connor’s urging, the council authorized the city’s legal office to pay no more than $10,000 to Arent, Fox, Plotkin, Kahn, the same firm that advised the city in its successful opposition of the proposed merger of San Diego Gas & Electric with SCEcorp, parent of Southern California Edison.

With the law firm’s help, the city will explore whether Hughes would be violating antitrust laws contained in the federal Hart-Scott-Rodino Act, Assistant City Atty. Curtis Fitzpatrick said Tuesday. He said the city will decide in two weeks whether to pursue the challenge.

Other business officials, however, seemed willing to concede that General Dynamics’ Convair Division missile operations and 4,500 jobs are likely to leave San Diego, and that the city would be better off spending its energy negotiating with Hughes to keep as many of the jobs in the area as possible.

Bill Irwin, an official with the International Assn. of Machinists and Aerospace Workers Local 1125, said the union has demanded a meeting with Hughes officials for Friday and complained that workers have been kept in the dark about Hughes’ plans for the San Diego operation, causing frustration and uncertainty. The union will distribute handbills outlining the demand to Convair workers today.

On Monday, Hughes announced a $450-million stock deal to acquire the Convair missile operations based in San Diego as well as General Dynamics’ Air Defense Systems division. General Dynamics had previously announced that it was selling its “non-core” missile, electronics and airliner fuselage manufacturing businesses.

Hughes said Monday that it planned to “consolidate” its missile operation with General Dynamics’ but gave no details on when and where job cuts will be made. The purchase agreement calls for Hughes to sign short-term leases for General Dynamics’ San Diego facilities, a sign that Hughes will move manufacturing out of the area, observers said.

Michael Keel, general manager of General Dynamics’ electronics and missiles unit, said Monday that it is likely that 2,000 jobs related to the Tomahawk cruise missile will be transferred out of San Diego as a result of the consolidation with Hughes. The other 2,500 local Convair missile jobs are expected to be phased out between now and August, 1993, as a result of defense budget cutbacks.

But Hughes said San Diego employees may not know their status with any certainty for weeks until Hughes devises a concrete consolidation plan.

Lee Grissom, president of the Greater San Diego Chamber of Commerce, said local business and civic leaders are seeking a meeting with Hughes executives to get information on the company’s plans and to plead the city’s case.

“The picture, in all candor, is not one that anyone finds very pleasant,” Grissom said. “But clearly the important player is Hughes, and the newest player on the scene is Hughes. . . . Hughes is a very diverse company. Maybe there are some products there they will be able to bring into San Diego.”

Grissom said General Dynamics officials told him that one of the reasons for the proposed sale is that the company feared it would lose the Tomahawk cruise missile business if the Navy changes it from a two-company to a one-company program.

General Dynamics and McDonnell Douglas’ Titusville, Fla.-based missile operation now share the annual 400-missile procurement. But the Navy wants the two companies to compete to become sole source suppliers starting next year, Grissom said.