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The jolt has reached thousands of small and intermediate-sized firms, from major subcontractors to the bars and bowling alleys where aerospace workers spend the nonessential parts of their paychecks. Times are especially perilous for the four titans of the industry, the billion-dollar corporations that serve as prime contractors and provide a strong source of support for whole cities. Though their individual states of health range from critical to fairly good, every one has been forced to cut jobs over the past three years, as the following employment figures show: 1968 1971 Lockheed 93,000 75,000 Boeing 102,000 44,000 North American Rockwell 114,000 76,000 McDonnell Douglas 124,700 92.000 By far the most desperately ill aerospace firm is Lockheed. It is struggling for survival after two grave errors. The company contracted to develop and build the huge C-5A cargo plane for the Air Force at a price that later seemed arbitrarily low. And it decided to bank on Britain's Rolls-Royce, Ltd. to deliver engines for its 256-passenger L-1011 TriStar super jet for a price too good to be true. Both the C-5A and the Rolls-Royce engine turned out to be riddled with "unk-unks," industry slang for "unknown unknowns." Last October, after cost overruns on the C-5A had enraged Congress, the Air Force reduced its order from 115 to 81, which resulted in a loss to Lockheed of $200 million. Worse yet, Rolls-Royce collapsed under the burden of unexpected costs on its contract, leaving Lockheed with exactly 17 engines to put on the 178 TriStars that it had sold.
Prospect of Delays
With help from the White House, Lockheed has been trying to renegotiate its contract with the British government and get the engines. Last week the two sides continued their meetings in Washington, still with no apparent result. If no deal can be made, Lockheed could still save the TriStar by buying engines from either Pratt & Whitney or General Electric. But that plan would put the plane's production even farther behind that of McDonnell Douglas' competing DC-10, deliveries of which are expected to begin later this year. Faced with the prospect of long delays, Delta Air Lines, one of the three major customers waiting for TriStars, has hedged its choice and ordered three DC-lOs. If other lines should follow, Lockheed might have to scratch its super jet.
The company's other major aerospace products—Poseidon missiles, C-130 cargo planes, S-3A antisubmarine planes and Agena satellites—are performing well and earning money. But the losses on its two flops are so huge that Lockheed is in deep trouble.
Boeing, for all its drastic job cutting, remains highly competitive in its longtime specialty, commercial aircraft. While some airlines have stretched out their orders, Boeing has searched hard for new customers overseas. Last year it landed nine—including Indian Airlines, Korean Airlines and Air Algerie—for various commercial jet orders. Their business was partly responsible for record sales of $3.7 billion. Boeing's earnings more than doubled last year, but, at $22 million, they were quite low relative to sales.