TRW Plays Key Role in Aerospace
TRW Inc. is a company that makes things most people are barely aware of--everything from air bags and anti-lock brake systems in vehicles to spy satellites floating silently in orbit that intercept radio communications from potential adversaries.
Indeed, most people know of TRW from the Orange County-based consumer credit reporting service it sold six years ago.
TRW still posts a reminder on its Web site that it no longer owns the credit service, which now is called Experian, and offers a phone number for the current owners.
Though TRW traces its birth to a small machine shop in Cleveland in 1901, the modern company was born after two top scientists, Simon Ramo and Dean Wooldridge, defected from Hughes Aircraft Co. almost 50 years ago.
TRW has evolved into a military and space technology powerhouse, playing an important part in the development of the nation’s intercontinental ballistic missile system and other defense technology.
The company employs 10,000 people in Southern California, most of them based at a sprawling space and satellite technology complex in Redondo Beach.
But TRW has had a rocky year, hurt by the economic recession and few growth opportunities in the automotive industry.
Sales dipped 5% to $16.4 billion last year from 2000, and profit plunged 85% to $68 million.
The company instituted a number of cost-reduction measures, including trimming its global work force in 2001 by 10,000 to 94,000.
It also saw turnover in eight of the 14 senior executive positions. And earlier this week, David M. Cote, its chief executive, abruptly resigned to head Honeywell International Inc.
Nonetheless, TRW shares rose $10.50 on Friday to close at $50.30 on the New York Stock Exchange on the strength of Northrop Grumman’s $5.9-billion bid for the company. That’s almost double TRW’s recent low of $27.43 on Sept. 21.
About 57% of TRW’s expected $17 billion in annual revenue this year comes from its automotive operations, but the sector can’t be counted on to “turn into an engine of growth and profitability for the company,” in the near term, according to a Merrill Lynch report.
But the aerospace and information systems divisions are expected to benefit from the increase in U.S. defense spending and could see sales increase by an annual rate of 12% to 13% this year and next, said the Merrill Lynch analysts.
The company was integral to the development of Southern California’s aerospace industry.
One of its greatest successes, said Julie Meier Wright, a former executive who now heads the San Diego Regional Economic Development Corp., is building the Pioneer 10 space probe, the first man-made object to leave the solar system.
“It was designed to take the first photos of Jupiter and last for only 21 months, but on the day they turned it off, it must have been 25 years old,” Wright said.
“But it might well be that some of the most important contributions TRW has made to the nation are the very things they won’t talk about,” she added.
According to John Pike, director of the GlobalSecurity.org think tank in Alexandria, Va., TRW developed some of the first spy satellites that were able to electronically transmit images to U.S. intelligence agencies.
Previous spy satellites used film-based cameras, periodically sending the film back to Earth in special reentry vehicles.
The cumbersome task of recovering and processing the film delayed intelligence assessments and was a constant frustration to the Pentagon and other government analysts, Pike said.
TRW also has been an important player in the development of satellites that intercept radio communications and radar signals, he added.
This type of classified work put TRW in the center of one the most notorious spy cases of the Cold War.
In 1977, federal agents arrested TRW employees Christopher John Boyce and Andrew Daulton Lee after they sold the Soviets thousands of secret documents, including material exposing a proposed espionage satellite system.
The case was recounted in the best-selling book “The Falcon and the Snowman.” Boyce was known as the Falcon because of his love for the raptors. Lee was the Snowman because he was a drug addict.
Their espionage was blamed in part on TRW’s lax security at the time. At one point, Boyce testified that the two used a code-destruction machine similar to a blender “for making banana daiquiris and mai tais.”
TRW’s predecessor, Thompson Products Co., built parts for World War I fighter planes and contributed an engine valve used by Charles Lindbergh on the first transatlantic flight, but the business was primarily an auto parts supplier well into the 1950s.
The company attempted to diversify in 1953, making an offer for Hughes Aircraft. Hughes rejected the offer, but Thompson was approached several months later by Hughes executives Ramo and Wooldridge, who were dissatisfied with how Howard Hughes ran his business.
Thompson agreed to spot the executives $500,000 to start a company, and Ramo-Wooldridge Corp. was established soon after in a closed barbershop near Los Angeles International Airport.
The company’s early work involved overseeing the development of the Thor, Atlas, Titan and Minuteman ICBMs.
Thompson merged with Ramo-Wooldridge in 1958, and seven years later the company changed its name to TRW.
By then the company had entered the space business. It provided NASA with Pioneer 1, the first industry-built satellite. TRW has since built nearly 200 spacecraft.
The company also has given birth to other businesses, including Aerospace Corp., a private, nonprofit spinoff created in 1960 to coordinate the ICBM program, after other aerospace companies complained that TRW had become both a manager and a competitor.
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