Ford Aerospace Sale Discussed for Months, Plant Workers Say

NEWPORT BEACH —  As Ford Motor Co. officials remained mum on reports that a sale of its defense division is in the works, employees at the firm’s Newport Beach plant said Saturday there has been widespread talk of a sale for months.

The Times reported Saturday that Ford Motor Co. is preparing to put its aerospace division up for sale and that Ford’s board of directors would consider the move as early as this week.

Reports of a possible sale come at a time of thawing tensions between the United States and Soviet President Mikhail S. Gorbachev, shrinking Pentagon budgets and uncertainty over the future of the defense industry.

“It isn’t only this ‘I love Gorby stuff,’ ” said a gray-bearded 57-year-old technician as he left the sprawling 2,700-employee Ford Aerospace Corp. plant Saturday morning. “Anyone with half a brain knew that things were starting to change.

“Contracts have been harder and harder to get,” said the technician, who asked not to be identified. “Competition was the name of the game, and we were getting beat.”

But Ford Aerospace officials continued to downplay reports of a pending sale of the Newport Beach-based company, which employs 17,000 worldwide and 10,000 in California.

“There are rumors now and there have been rumors about this kind of thing before,” said Susan M. Pearce, Ford Aerospace’s vice president of public affairs.

“The company is doing well, certainly in the context of the industry situation,” Pearce said. “We have a significant (order) backlog. We’ve won some major contracts in the past year.”

Some industry analysts said the sale would follow a recent trend among large conglomerates to sell off small defense businesses now that the Cold War is winding down. Chrysler Corp., for example, recently sold its defense division, Chrysler Technologies.

“When you have a downturn in military spending, as we do now, these companies just don’t want to put their money into the defense business,” said Paul Nisbet, an analyst with Prudential Bache Research. “I can understand an auto company saying, ‘We can get a better return on investment.’ ”

One sign that Ford may be shifting from defense to focus more heavily on its bread-and-butter business is its $2.5-billion purchase of Jaguar, the British auto maker, in November, some analysts said.

Analysts suggested that several major aerospace companies may be interested in purchasing Ford Aerospace. Among the potential buyers are Martin Marietta, Rockwell International, Boeing Co. and General Dynamics, analysts said.

Ford Aerospace has had a major presence in Orange County for three decades. In 1960, Philco-Ford, a division of Ford Motor, moved its defense operation from Glendale to a 200-acre site in Newport Beach.

Today, Ford Aerospace is best known as a manufacturer of missiles, electro-optics systems and satellites, with annual sales of about $2 billion.

In recent years, Ford Aerospace has had its share of successes--and setbacks.

In September, NASA awarded Ford Aerospace a $500-million contract to upgrade the Mission Control facility at Johnson Space Center in Houston for space shuttle flights. And last month, the company won an additional $150-million contract for work at the space center.

The awards helped soften the blow of Ford Aerospace’s unsuccessful bid to win a $3-billion contract to build a portable, bazooka-type weapon for the Army a year ago.

Three years earlier, Ford suffered a bigger embarrassment with the cancellation of a multibillion dollar Army contract to build the controversial anti-aircraft gun known as the Sgt. York.

Despite spending nearly $1.5 billion on the Sgt. York, the Pentagon abruptedly dropped the program in August, 1985, after critics charged that the weapon was unreliable. The cancellation forced Ford Aerospace to lay off 1,200 workers locally.

The Sgt. York debacle is still fresh in the minds of many longtime workers at the Newport Beach plant.