McDonnell to Hire 250 for Rocket Program

McDonnell Douglas Space and Defense Systems announced that it will begin hiring 250 workers within weeks after it learned Friday it was selected as a finalist to develop the next generation of military rockets.

The $60-million development contract, which pits McDonnell Douglas against Lockheed Martin Corp., also sets the stage for hundreds of more jobs to be added by McDonnell Douglas and its local subcontractors if the company lands the final $1.4-billion deal.

“This is a big day for us, and an important program,” said Gale Schluter, vice president and general manager of McDonnell Douglas space and defense.

Besides serving the Defense Department, the new rocket program “is a national launch system, which will be able to compete and win in the world commercial market,” Air Force Secretary Sheila Widnall said in announcing the finalists at a news conference in Washington.

The two other competitors were Boeing Co. of Seattle and Alliant Techsystems of Minneapolis. Boeing stays in contention because it recently agreed to buy McDonnell Douglas for $13.3 billion in the largest aerospace merger ever.

In addition, Boeing’s Rocketdyne rocket-engine subsidiary in Canoga Park--which Boeing bought earlier this month from Rockwell International Corp.--is developing the main engines for McDonnell’s entry in the competition.

McDonnell and Lockheed each will receive a $60-million, 17-month contract to complete development and testing of their versions of new rockets. McDonnell Douglas officials said they will begin hiring engineers and designers in January.

Schluter said the Boeing acquisition, expected to close early this summer, should not affect the program and that Boeing is not expected to move any of the work out of Orange County.

The ultimate contract winner, to be chosen in 1998, not only would develop a new family of military rockets but also would have an advantage in commercial rocketry. Thus, the winner could be looking at tens of billions of dollars in new contracts over the next two decades.

The competition could create hundreds of jobs in Orange County even if McDonnell Douglas’ space unit, which now employs 5,600 workers, doesn’t win.

Schluter and program manager Dave Schweikle said the development contract still provides the company $60 million to refine its Delta IV rocket, which can be sold to other governments and private customers.

Additionally, the Air Force has committed to buying only the first 20 of the estimated 195 missiles it will need from the winner of the manufacturing contract. After that, Schluter said, McDonnell Douglas could reenter the bidding with the Delta IV.

In halving the field of contenders, the Air Force went with the companies that dominate the U.S. rocket industry. Lockheed Martin’s space-launch group in Denver makes the medium-lift Atlas and heavy-lift Titan boosters, and McDonnell builds the smaller Delta rockets.

But the design of those rockets dates to the 1950s, when the launchers were originally developed to carry intercontinental ballistic missiles.

The Pentagon now wants to replace those rockets with a new line of less expensive, more efficient boosters--known as evolved expendable launch vehicles, or EELVs--that will slash its launch costs by up to 50%. The EELV program would use a single, modular system that could be used in different combinations to lift various payloads into low or high orbits.

The ultimate EELV winner is expected to get a $1.4-billion development contract from the Air Force in 1998.

A Lockheed victory in the EELV contest would give the company a hammerlock on the U.S. launch business. In July, Lockheed won the competition to develop the prototype for the nation’s next-generation reusable space shuttle.

The EELV rockets would begin to launch payloads in 2001 from sites such as Vandenberg Air Force Base. The business prospects for the winner are enormous. The Pentagon has estimated that the United States alone will need more than 190 launches between 2001 and 2020.

Developing less costly rockets could give the winner a significant competitive edge in commercial launches as well, where the French-based consortium Arianespace dominates with about 60% of the market. Rockets made in Russia and China also compete in the market, which is rapidly expanding, thanks to a flurry of proposed satellite-based telecommunications projects that will sharply increase demand for launch vehicles.

*

Times staff writer Ralph Vartabedian reported from Washington, O’Dell from Orange County and Peltz from Los Angeles.