Lockheed-Martin Union: Pairing, Then Paring : Mergers: Both firms have pushed defense conversion. But experts say that even commercial ventures will get a hard look now.

Lockheed and Martin Marietta say their planned merger will accelerate both companies’ post-Cold War expansion into commercial markets, but analysts are skeptical.

The experts say the merger aims chiefly to create a leaner, meaner defense contracting giant. Beyond that, they figure, the consolidation is a chance for both firms to give their commercial ventures a long, hard look--then dump the ones that aren’t solid moneymakers with roots in defense.

Besides defense, “everything will be on the table now,” said Rohit Shukla, executive director of the nonprofit Los Angeles Regional Technology Alliance.

Calabasas-based Lockheed Corp. and Bethesda, Md.-based Martin Marietta Corp. announced plans last week to combine forces to create an aerospace powerhouse with $23 billion in annual sales.

Both say their commitment to diversify away from defense remains firm despite the planned merger, the largest consolidation in defense industry history. And the companies’ chief executives predict that the new Lockheed Martin Corp. will eventually grow, after the unspecified job cuts that will come with the move.

But job applicants shouldn’t hold their breath. Analysts paint a picture of a smaller, tighter Lockheed Martin pared down to the areas in which it has clear superiority, civilian or military.

Commercial markets expected to be targeted by the new company include space systems, information services and environmental technology. As for other non-defense business lines, “they will shed like you wouldn’t believe,” predicted Shukla.

Ventures such as CalComp, Lockheed’s Anaheim-based computer graphics concern, will be among the first dumped by the new defense giant, he said. Profits at CalComp, which employs 1,600 worldwide, have been disappointing, and Lockheed tried unsuccessfully to sell the firm a few years ago.

Access Graphics, headquartered in Boulder, Colo., is another computer-related Lockheed venture that’s likely to be a square peg in the new company, said Lior Bregman, an analyst with the investment banking firm Oppenheimer & Co. in New York. “Graphics and computer peripherals never fit, and it still doesn’t fit,” he said.

Even profitable companies such as Burbank-based Lockheed Air Terminal, the firm’s airport management company, may eventually be sold, Shukla said. In recent years, the unit has expanded from airport management to airport development. But despite its modest success, the company “does not contribute anything to (Lockheed’s) core business,” Shukla said.

Lockheed and Martin Marietta have made strides in recent years to diversify away from defense. Lockheed is involved in everything from collecting highway tolls to developing commercial launch vehicles. U.S. defense sales shrank from 70% of Lockheed’s total sales in 1991 to 64% last year.

Martin Marietta’s sales outside U.S. defense accounted for more than 30% of its revenue last year, up from 25% five years ago, company spokesman Charles P. Manor said. The firm’s diversification efforts range from a joint venture with a company that dissolves pollutants in molten metal to providing computer graphics technology for Tokyo-based video game maker Sega Enterprises.

Both companies were on paths toward expanding non-defense activities to 50% of sales, and that evolution will continue apace with the merger, Manor said.

“Everyone has focused . . . on the creation of a defense juggernaut,” he said. “But we did this not just to have a critical mass with (the Defense Department), but to compete in global markets.”

However, some analysts question whether the huge new Lockheed Martin will be any more competitive outside of defense. Being big “makes it harder for them to be flexible, adaptable and operate as a commercially successful enterprise,” said Dan Flaming, president of the Economic Roundtable, a nonprofit public policy think tank in Los Angeles.

Lockheed’s more successful commercial offspring include Lockheed Information Management Services Co. in Teaneck, N.J., which provides systems for processing parking tickets and toll-road collections for local governments. It has also developed “intelligent highways” that, using sensors, can assess fees as commuters drive by toll booths.

But Lockheed’s most celebrated defense-conversion efforts can be found at Lockheed Missiles & Space Co. in Sunnyvale, Calif.

The unit is rooted in the development of ballistic missile systems, but it has also done business in space exploration for NASA.

Nowadays, however, Missiles & Space is using its technological base to expand into space imagery products, commercial launch vehicles and materials technology. It has also secured a $700-million contract with the Motorola Satellite Communications Division to develop parts of a constellation of orbiting communications satellites called Iridium.

Martin Marietta is an old hand in space technology. The company makes both the Titan and Atlas rocket systems.

“Space is the common denominator,” said Bregman, the Oppenheimer analyst, adding that all of Lockheed’s space efforts “fit very well with Martin Marietta’s.”

The same goes for environmental services, he said. Lockheed’s ventures in that sector are “a perfect fit” with Martin Marietta’s, Bregman said. Besides the agreement with Molten Metal Technology Inc. of Waltham, Mass., Lockheed also oversees toxic waste cleanup at Department of Energy facilities.

Together, Lockheed and Martin Marietta are well poised to take advantage of growing concern over pollution problems overseas, according to Shukla. “There are huge markets out there,” he said.

Lockheed Martin will also move rapidly toward commercialization of its military business, Shukla said. “They won’t design from the ground up for a specific customer anymore. They will design one product and market it in many ways.”

For now, though, the new aerospace behemoth is likely to spend some time digesting.

“There’s a limit to how much an organization can absorb and assimilate at one time,” Schwendinger said. “It’s going to take them a couple years at least.”