Shuttle Deal Will Benefit Scores of Firms

Lockheed Martin was the big winner this week when its Skunk Works division in Palmdale was awarded the contract to build the prototype for a next-generation space shuttle.

But scores of other businesses throughout the region will also benefit--from major subcontractors such as Rocketdyne in Canoga Park, Rohr in Chula Vista and AlliedSignal Aerospace in Torrance, to small machine shops and parts suppliers.

Initially, the economic impact of the so-called X-33 program will be modest. The contract is for about $1 billion over four years--relatively small compared with other major aerospace projects. And about 2,000 workers are expected to be involved with the X-33 during those four years, mostly in Southern California.

But in 1999, Lockheed Martin will decide whether to proceed with a full-scale rocket. If the X-33 is eventually mass-produced, several thousand jobs could be created and billions of dollars could flow into the local economy.

Rocketdyne, whose parent company, Rockwell International, lost the bid to build the experimental spacecraft, will nonetheless get a big chunk of the work. The unit, which now produces the engines for the space shuttle, will supply a newly designed engine for the X-33 to Lockheed Martin. That work will earn it about $270 million of the $1-billion contract.

About 200 Rocketdyne workers will devote themselves to the program during the next six months. By the end of the decade, that number could rise to 700, some of which will be new hires, said program manager Mike Hampson.

Also, over the next four years, Rocketdyne will parcel out work to other subcontractors to the tune of $100 million and has already identified nine companies in the San Fernando Valley that it will use, Hampson said. They include a sheet metal company, an engineering firm and a precision tooling firm.

“It’s the traditional aerospace supplier base that will benefit from the work we’re going to do,” Hampson said. “It’s small at this point, but after the turn of the century, if this goes as we expect it to, it will be a multibillion-dollar product line.”

Whether it gets to that point remains to be seen. The X-33 program is unusual in that after the prototype is built, it will be up to private industry to fund further development of a fleet of spacecraft.

It’s believed that NASA will use the reusable rockets to shuttle astronauts and equipment to and from the space station, but other markets must develop to make the business financially viable.

Still, the companies that will take part in Lockheed Martin’s contract award--announced by Vice President Al Gore at NASA’s Jet Propulsion Laboratory in Pasadena on Tuesday--were cheered by the news.

One such firm is Precision Quality Products in North Hills, a precision machining shop with about $1 million in annual sales, which will receive some X-33 work from Rocketdyne. Lidia Gorko, Precision Quality’s president, said the business is big news at her tiny company, particularly after enduring some rough years during the aerospace downturn.

“For us, it’s very big. We’re very happy,” Gorko said. “This is a much larger quantity than what we’ve done in the past. And it gives us additional exposure.”

Another beneficiary is Rohr, which will make the thermal protection system for the X-33. Rohr expects to hire another 50 to 80 workers for the project and will probably only break even on its $100 million worth of work during the next four years, said John Burton, vice president of new business and advanced product development.

But the company expects to gain from technology advancements that could be used elsewhere in its business. And if the X-33 program goes beyond the experimental stage and into full production, it could evolve into many hundreds of millions of dollars of additional business for Rohr, Burton said.

In addition, AlliedSignal Aerospace in Torrance will supply the avionics for the X-33, which will include navigation units provided by Litton Industries’ Guidance and Control division in Woodland Hills.

Bob Knapp, a Litton spokesman, said the work wouldn’t mean any new jobs at the company. But, he added, “from a prestige standpoint, you bet your life it’s important. It’s the space program for the future.”

Tom Leiser, associate director of the UCLA Anderson Business Forecast, said the companies involved in the X-33 work will benefit because the technology they develop for the X-33 could be transferred to other products and businesses, just as satellite technology originally designed for the government is now finding applications in a wide range of industries.

“You won’t see it right away, but there’s no question those benefits exist and can be quite substantial,” Leiser said.

The X-33 could also provide a boost to other non-aerospace businesses that have been through tough times lately. For instance, Lockheed Martin’s X-33 project manager, Jerry Rising, said local construction workers are expected to be hired to help build the launch site at Edwards Air Force Base.

Robert Paulson, head of the aerospace practice at the consulting firm McKinsey & Co., said a “third tier” of benefit typically develops from major aerospace contracts.

That includes all the services and products that are used by companies and their workers--including banks, medical facilities, retailers and real estate agents.

“What you generally find is that for every job created at Lockheed, another 1 1/2 to 2 1/2 jobs are created in the second and third tier,” Paulson said.

Pete Datilo, a real estate agent for Century 21 in Palmdale, cheered the Lockheed Martin win as a blessing for the local real estate market, which is recovering from a prolonged slump brought on by the aerospace recession of the last several years.

“The contract is much needed good news,” Datilo said. “We have suffered a long time here waiting for some jobs to come.”

Times correspondent Jill Leovy contributed to this report.